CECIMO Statistical Toolbox European Association of the Machine Tool Industries
Table of content Introduction 1 Data specific to the European machine tool market 1.1 CECIMO8 orders 1.2 Peter Meier s forecast 1.3 MT-IX 1.4 CECIMO trade 1.5 CECIMO production 1.6 CECIMO Business Climate Barometer 2 Macroeconomic data in relation with machine tool orders 2.1 GDP 2.2 Interest rates - Euribor 2.3 Industrial production index 2.4 Gross Fixed Capital Formation (GFCF) 2.5 Capacity utilisation in the invest. goods sector 2.6 Bank lending survey 2.7 Foreign exchange rates 2.8 Industrial employment 2.9 OECD Business Confidence Indicator for Europe 2.10 Purchasing Managers Index (PMI) 2.11 European Commission economic forecast Glossary i The items in grey are not available in this edition of the Statistical Toolbox.
Introduction The year 2016 has not started with the overload of positive news. The International Monetary Fund revised its global growth forecast down to 3.4 percent in 2016 and 3.6 percent in 2017. The pickup in global growth is weak and uneven across economies, with the emerging markets now presenting more risks. Advanced economies will see a modest recovery, while emerging market and developing economies face slower growth, a new reality for them. Growth in advanced economies is projected to rise to 2.1 percent this year and hold steady in 2017, a slightly weaker pickup than in previous forecast. Overall, the activity remains robust in the United States, while growth in Japan is expected to pick up on the back of fiscal support, lower oil prices and accommodative financial conditions. In the euro area, stronger private consumption, supported by lower oil prices and good financial conditions, is outweighing the net exports diminution. Growth forecasts for most emerging market and developing economies reveal a slower pickup than previously estimated by the IMF. Growth is projected to increase from 4 percent in 2015, the lowest rate since the 2008 09 financial crisis, to 4.3 and 4.7 percent in 2016 and 2017 respectively. Still, there is a considerable difference between countries in this group. India and parts of Asia are estimated to grow at a robust pace. On the other hand, Latin America will see a contraction again in 2016, reflecting the recession in Brazil and economic stress elsewhere in the region. While the global economy is quite sound, the markets face considerable volatility and uncertainty. Serious financial turbulence in China marked the start of 2016. As an effect, the competence of its leadership was called into question. Chinese officials have admitted that poor communication contributed to creating anxiety on the global market following China s falling currency. Quite obviously, open communication does not make up an essential part of the country s economic policies. As stressed by the IMF, Chinese authorities have to clarify their intentions, the country needs to establish clear and credible communication channels with the markets to avoid further overreactions. Volatility in Asia has its effects on European manufacturing. In December 2015, the business climate indictor increased slightly but in January, the consumer confidence decreased in the euro area and the EU compared to December. The outlook for business sentiment trends is also negative, taking into account that German business confidence fell to its lowest level in 11 months in January. The uncertainty caused by the possibility of a slowdown in global trade and a weaker Chinese economic growth certainly has an impact on the machine tool industry. Even if low interest rates and falling unemployment continue to support domestic demand, the uncertainty weighs heavily on businesses and their investment decisions. One way for policy makers to provide businesses with resilience against global headwinds is to support the regulatory framework for international trade and investment. While the World Trade Organisation ministerial conference, taking place in December in Nairobi, concentrated on agriculture and development agenda, the European Commission met Chinese colleagues to discuss the investment agreement. The EU and China agreed in particular that the future deal should improve the investors market access by establishing a genuine right to invest and by providing a guarantee against 3
discrimination. The EU and China also committed to address key challenges of the regulatory environment, including those related to transparency, licensing and authorisation procedures, and to provide for a high and balanced level of protection for investors and their investments. The agreement will also include rules on environmental and labour-related dimensions of foreign investment. The EU-China talks were launched at the end of 2013 and this is a major step forward on the way to the final investment agreement. 1. Data specific to the European machine tool market q 1.3 MT-IX i In December, the MT-IX decreased by 5.0% and posted at 209 points. The index lost 11 points compared to November s value. The market value of machine tool companies decreased in Brazil, South Korea, Japan, Taiwan and the United Kingdom. The market capitalisation of companies increased in the United States. In the euro area and Switzerland, the market capitalisation of machine tool companies booked more varied results. 240 MT-IX (index 100 = January 2010) MT-IX MT orders (Index 100 = 2010) 200 190 CECIMO orders 180 218 160 209 140 140 CECIMO MTIX 12-month moving average 120 100 90 80 CECIMO MTIX There is a 63% correlation between MTIX 12 month moving average and CECIMO orders 60 40 2006-01 2006-04 2006-07 2006-10 2007-01 2007-04 2007-07 2007-10 2008-01 2008-04 2008-07 2008-10 2009-01 2009-04 2009-07 2009-10 2010-01 2010-04 2010-07 2010-10 2011-01 2011-04 2011-07 2011-10 2012-01 2012-04 2012-07 2012-10 2013-01 2013-04 2013-07 2013-10 2014-01 2014-04 2014-07 2014-10 2015-01 2015-04 2015-07 2015-10 2016-01 40 4
p 1.4 CECIMO trade Economic recovery in Europe drove CECIMO exports to 4.6 billion euro (6% increase) in the third quarter of 2015. Europe is the most important market for European machine tool builders and this importance is increasing even further, almost half of the CECIMO s exports were shipped to Europe in the period considered. Modern, highly productive European machine tools are also in great demand in the Americas and Asia. The exports to those regions grew both 3% and together the two markets account for 41% of the CECIMO s exports. Among the most important single export markets, the United States and Russia recorded declines 3% and 22%. The machine tool market of the United States has been performing well but is probably showing some saturation, while the sanctions on Russia have curbed the business opportunities in the country. On the other hand, exports to China increased by 4% to 671 million euro in the third quarter of 2015. The weak euro exchange rate points to a good export performance from European machine tool builders. Despite the weak euro, CECIMO imports follow an increasing trend. Strong European machine tool sales increased CECIMO imports by 14% to 2.4 billion euros in the third quarter of 2015. Taking into account the backlogs, the machine tool imports to the euro area are very likely to slow down in the near future. CECIMO s main suppliers, accounting for 95% of all imported machines, are from Europe or Asia. CECIMO s imports from Europe increased by 17% to 1.5 billion euro. Imports from Asia rose 9% to 0.7 billion euro. The main suppliers to the European industry outside the EU are Japan, Taiwan and China. CECIMO exports and imports per zones - 2015Q3 EXPORTS Zone 2015Q3 2014Q3 2015Q3/ 2014Q3 Share 2015Q3 Share 2014Q3 I. ASIA 1 151 759 1 122 503 3% 25% 26% II. AMERICAS 762 895 737 706 3% 16% 17% III. EUROPE 2 262 417 1 951 464 16% 49% 45% CECIMO 1 761 063 1 550 807 14% non CECIMO 501 354 400 657 25% IV. Russia + CIS 218 082 305 461-29% 5% 7% V. OTHERS 231 713 229 330 1% 5% 5% TOTAL EXPORTS 4 626 866 4 346 464 6% IMPORTS Zone 2015Q3 2014Q3 2015Q3/ 2014Q3 Share 2015Q3 Share 2014Q3 I. ASIA 706 894 647 178 9% 30% 31% II. AMERICAS 112 396 99 407 13% 5% 5% III. EUROPE 1 532 101 1 312 075 17% 65% 63% CECIMO 1 476 915 1 259 159 17% non CECIMO 55 186 52 916 4% IV. Russia + CIS 3 700 2 344 58% 0% 0% V. OTHERS 13 557 13 663-1% 1% 1% TOTAL IMPORTS 2 368 648 2 074 667 14% 5
2. Macroeconomic data in relation with machine tool orders q 2.2 Interest rates EURIBOR i The average 3-month Euribor and 12-month Euribor recorded respectively -0.13% and 0.06% in December. Compared to November, the average 3-month Euribor decreased by 4 percentage points and the average 12-month Euribor by 2 percentage points. In December, the European Central Bank (ECB) kept unchanged its interest rate on the main refinancing operations as well as the rate on the marginal lending facility. The ECB decided to lower the interest rate on the deposit facility by 10 basis points to -0.30%. The euro area annual inflation was 0.2% in December 2015, up from 0.1% in November. Despite a slight improvement in inflation performance, some experts believe it is a matter of time before the global economic conditions force the ECB to unleash a fresh round of monetary stimulus. The actions could include another cut to the deposit rate, which is levied on a portion of banks deposits parked at central banks in the euro area, as well as an expansion of the ECB s quantitative easing scheme. 6% Euribor rate Interest rates - EURIBOR MT orders (100 = 2010) 170 5% 4% MT ORDERS 12M moving average 143 150 130 3% 2% 12M EURIBOR quarterly average 110 ECB refinancing rate 1% 90 0% -1% 15% correlation between Euribor 12M & 12-month moving average of MT orders source: Euriobor.org + CECIMO 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 3M EURIBOR quarterly average 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 0,09% 0,05% 70-0,09% 50 6
q 2.3 Industrial production index i In November 2015 compared with October 2015, the seasonally adjusted industrial production fell by 0.7% in the euro area and by 0.6% in the EU28 according to estimates from Eurostat, the statistical office of the European Union. In October 2015, the industrial production rose by 0.8% and 0.6% respectively. In the euro area, the decrease of 0.7% in industrial production is due to the production of energy falling by 4.3%, the production of capital goods by 1.9% and the production of durable consumer goods by 1.0%, while the production of nondurable consumer goods rose by 0.1% and the production of intermediate goods by 0.7%. In the EU28, the decrease is due to the production of energy falling by 3.5%, the production of capital goods by 1.3%, the production of durable consumer goods by 0.3% and the production of non-durable consumer goods by 0.1%, while the production of intermediate goods rose by 0.5%. Among Member States for which data are available, the largest decreases in industrial production were registered in Portugal (-4.9%), Malta (-3.7%), the Netherlands (-3.1%), Estonia and Lithuania (both -2.6%), and the highest increases in Greece (+3.3%) and Slovakia (+1.9%). In November 2015 compared with November 2014, industrial production increased by 1.1% in the euro area and by 1.4% in the EU28. The increase in industrial production in the euro area is due to the production of intermediate goods rising by 2.1%, the production of durable consumer goods by 1.7% and the production of both capital goods and non-durable consumer goods by 1.2%, while the production of energy fell by 2.8%. In the EU28, the increase is due to the production of capital goods rising by 2.0%, the production of intermediate goods by 1.8%, the production of durable consumer goods by 1.7% and the production of non-durable consumer goods by 0.8%, while the production of energy fell by 1.2%. In yearly comparison among Member States for which data are available, the highest increases in industrial production were registered in Ireland (+14.2%), Slovakia (+11.9%) and Hungary (+7.1%), and the largest decreases in the Netherlands (-8.0%) and Estonia (-6.2%). Industrial production index MT orders in CECIMO 8 (index 100 = 2010) 180 160 MT orders - 12M moving average 143 140 Industrial Production - 12M moving average 102,6 120 100 80 Source: Eurostat + CECIMO A 87% correlation between industrial production and MT orders (12-month rolling basis) since 1996 60 40 15Q4 15Q3 15Q2 15Q1 14Q4 14Q3 14Q2 14Q1 13Q4 13Q3 13Q2 13Q1 12Q4 12Q3 12Q2 12Q1 11Q4 11Q3 11Q2 11Q1 10Q4 10Q3 10Q2 10Q1 09Q4 09Q3 09Q2 09Q1 08Q4 08Q3 08Q2 08Q1 07Q4 07Q3 07Q2 07Q1 7
p 2.4 Gross Fixed Capital Formation (GFCF) During the third quarter of 2015, gross fixed capital formation (GFCF) remained stable in the euro area and rose by 0.3% in the EU28 compared with the previous quarter, according to a second estimate published by Eurostat. In the second quarter of 2015, GFCF grew by 0.1% and 0.4% respectively. Compared with the same quarter of the previous year, the seasonally adjusted GFCF rose by 2.2% in the euro area and by 2.7% in the EU28 in the third quarter of 2015 after increasing 2.6 % and 3.1% respectively in the previous quarter. Among Member States for which data are available for the third quarter of 2015, Lithuania (+12.4%), the Netherlands (+9.8%), Sweden (+7.6%) and Spain (+6.5%) recorded the highest growth compared with the previous quarter. Decreases were registered in Greece (-12.9%), Belgium (-5.9), Finland (-4.0%) and Estonia (-3.9%). During the third quarter of 2015, GFCF in the United States increased by 1.0% compared with the previous quarter (after +0.5% in the second quarter of 2015). Compared with the same quarter of the previous year, the GDP grew by 3.6% (after +2.2% in the previous quarter). 600 GFCF (Euro area 19 countries) in billion Gross Fixed Capital Formation MT Orders (index 100 = 2010) 175 550 Gross Fixed Capital Formation (billion ) 142 155 500 510.9 135 450 115 400 12 month rolling average of MT orders 95 350 75 300 55 2015Q3 2015Q2 2015Q1 2014Q4 2014Q3 2014Q2 2014Q1 2013Q4 2013Q3 2013Q2 2013Q1 2012Q4 2012Q3 2012Q2 2012Q1 2011Q4 2011Q3 2011Q2 2011Q1 2010Q4 2010Q3 2010Q2 2010Q1 2009Q4 2009Q3 2009Q2 2009Q1 2008Q4 2008Q3 2008Q2 2008Q1 2007Q4 2007Q3 2007Q2 2007Q1 p 2.7 Foreign exchange rates The euro exchange rate increased in December. The nominal effective exchange rate of the euro, as measured against the currencies of 19 of the euro area s most important trading partners, stood in December at 1.6% above November s rate, but 6.6% below its level one year earlier. On bilateral level, we can see more variable trends. The average euro exchange rate appreciated against the US dollar by 1.5% and against the Japanese yen by 0.7% in December compared to previous month. At the same time the euro depreciated against the Swiss franc by 0.1%. -See graph on next page.- 8
200 CECIMO foreign orders index Foreign exchange rates Units per 1 EUR (quarterly average) 1,7 180 1,6 160 1,5 140 120 USD 141 1,4 1,33 1,3 CHF 1,2 100 1,10 1,1 1,08 80 100JPY 1 60 0,9 40 Source: oanda.com + CECIMO 07-01 07-02 07-03 07-04 08-01 08-02 08-03 08-04 09-01 09-02 09-03 09-04 10-01 10-02 10-03 10-04 11-01 11-02 11-03 11-04 12-01 12-02 12-03 12-04 13-01 13-02 13-03 13-04 14-01 14-02 14-03 14-04 15-01 15-02 15-03 15-04 0,8 p 2.9 OECD Business Confidence Indicator (BCI) for Europe i Business confidence indicators (BCIs), designed to anticipate turning points in economic activity relative to trend, point to stable growth momentum in the OECD area as a whole but to diverging patterns across major emerging economies. The outlook is for stable growth momentum in the euro area as a whole and in France. The BCIs signal firming growth in broader Europe, Germany and Spain. The BCIs for Italy and the United Kingdom show a loss of growth momentum albeit from relativly high levels. In the United States, the BCI points to easing growth while stable growth momentum is anticipated in Japan. Amongst the major emerging economies, the BCI of Brazil confirm the tentative signs of stabilisation flagged in last month. In China, the BCI point to stable growth, but below a long-term trend. In Russia and India, the BCIs indicate growth losing momentum. 180 MT orders (100=2010) OECD Business Confidence Indicator (BCI) for Europe Business Confidence 106 104 160 Business Confidence 3M average with +6 month time lag 102 143 140 100,3 100 98 120 96 100 MT Orders - 12M moving average 94 80 There is 84% correlation between BCI Europe+ 6 months and smoothed MT Orders in CECIMO 8 since 2001 source: OECD + national associations Business confidence shows a long-term trend in industrial production (with a 6-month time-lag). An increase over 100 means expansion; a decrease above 100 means a downturn; an increase below 100 is an upturn and a decrease below 100 is a slowdown 92 90 60 88 4Q15 3Q15 2Q15 1Q15 4Q14 3Q14 2Q14 1Q14 4Q13 3Q13 2Q13 1Q13 4Q12 3Q12 2Q12 1Q12 4Q11 3Q11 2Q11 1Q11 4Q10 3Q10 2Q10 1Q10 4Q09 3Q09 2Q09 1Q09 4Q08 3Q08 2Q08 1Q08 4Q07 3Q07 2Q07 1Q07 9
p 2.10 Purchasing Managers Index (PMI) i The global expansion rates in production and the new orders both slowing in December brought down the manufacturing PMI. The global index recorded 50.9 in December, down from 51.2 in November. Weighed down by a weak demand at home and abroad, its factory overcapacity and investments slowing down, the China PMI slipped to 48.2 down from 48.6 in November. The Indian manufacturing activity also contracted in December for the first time in more than two years, hurt by its softening domestic demand. The Indian PMI fell to 49.1 in December from November's 50.3. The PMIs in South Korea and Taiwan edged above the 50 mark, though more thanks to a pick-up in domestic demand than any revival in exports. The US index of national factory activity fell to 48.2 from 48.6 in November and is now at its lowest level since June 2009. Manufacturing, which accounts for 12 percent of its economy, has also been hammered by a strong dollar, as well as slower global demand and efforts by American businesses to reduce an excessive inventory build, which are keeping downward pressure on new orders The Euro area manufacturing activity ended 2015 in expansion, suggesting that manufacturing growth over the year as a whole averaged above the previous three. The final PMI rose to a 20-month high of 53.2 in December and above November's 52.8. It has held above the 50 mark that separates growth from contraction for well over two years. The German business activity expanded at its quickest pace in last four months with its PMI reaching 53.2. Italian manufacturing growth hit its highest in almost five years, the PMI recording 55.6. The PMIs of Spain and the Netherlands showed good pace in manufacturing, but at lower levels than in previous month. The end of 2015 saw the eurozone manufacturing recovery gain further traction, with rates of expansion in production and new orders over the final quarter besting those of quarter three. The sector is therefore likely to make a meaningful positive contribution to the euro GDP numbers for quarter four. Survey data also indicate that manufacturing growth over 2015 as a whole averaged above those achieved in each of the previous three years. Furthermore, with the Greek PMI rising back into growth territory in December, we are now seeing concurrent expansions signalled in all of the surveyed nations for the first time since April 2014. Italy remained the leading light in December, while accelerated growth in Germany and France added welcome buoyancy to the region s manufacturing performance. Solid job creation in the sector should also help chip away at the sustained high levels of unemployment still being experienced by some nations. While there is much to be positive about in these figures, the underlying picture is still one of solid yet unspectacular expansion. With eurozone manufacturing still some 9% off its pre-crisis peak, it looks as if the sector still has some distance to travel before the climb back to full recovery is completed, commented Markit. 10
160 Purchasing Managers Index (PMI) - Global PMI 70 140 65 120 60 100 55 53,2 80 50,9 50 48,2 60 45 40 40 2015-10 2015-07 2015-04 2015-01 2014-10 2014-07 2014-04 2014-01 2013-10 2013-07 2013-04 2013-01 2012-10 2012-07 2012-04 2012-01 2011-10 2011-07 2011-04 2011-01 2010-10 2010-07 2010-04 2010-01 2009-10 2009-07 2009-04 2009-01 2008-10 20 Global Eurozone 35 0 source: Markit Economics + National Statistics USA MT orders 30 Purchasing Managers Index (PMI) - Europe PMI 63 58 55,6 53,2 2008-10 2009-01 2009-04 2009-07 2009-10 2010-01 2010-04 2010-07 2010-10 2011-01 2011-04 2011-07 2011-10 2012-01 2012-04 2012-07 2012-10 2013-01 2013-04 2013-07 2013-10 2014-01 2014-04 2014-07 2014-10 2015-01 2015-04 2015-07 2015-10 53,2 53 53,0 52,1 48 43 Eurozone Germany Italy Spain 38 33 Switzerland source: Markit Economics 28 -See graph on next page.- 11
Purchasing Managers Index (PMI) - Asia PMI 64 59 54 52,6 51,7 50,7 49 49,1 48,2 44 2015-10 2015-07 2015-04 2015-01 2014-10 2014-07 2014-04 2014-01 2013-10 2013-07 2013-04 2013-01 2012-10 2012-07 2012-04 2012-01 2011-10 2011-07 2011-04 2011-01 2010-10 2010-07 2010-04 2010-01 2009-10 2009-07 2009-04 2009-01 2008-10 China 39 source: Markit Economics India Japan S. Korea Taiwan 34 29
Glossary i 1.3 MT-IX MTIX is and index based on the capitalization of 23 leading, publicly listed machine tool producing companies. The capitalization of the companies included is weighted by the share of machine tool turnover in total revenues. The total capitalization calculated in that way is weighted then by and estimated share of the European companies in the world total output in 2010. 2.2 Interest rates - Euribor Euribor (Euro Interbank Offered Rate) is the rate at which euro interbank term deposits are being offered by one prime bank to another within the EMU zone. http://www.euribor-ebf.eu/ 2.3 Industrial production index The objective of the production index is to measure changes in the volume of output at close and regular intervals, normally monthly. It provides a measure of the volume trend in value added over a given reference period. The production index is a theoretical measure that must be approximated by practical measures. Value added at basic prices can be calculated from turnover (excluding VAT and other similar deductible taxes directly linked to turnover), plus capitalised production, plus other operating income plus or minus the changes in stocks, minus the purchases of goods and services, minus taxes on products which are linked to turnover but not deductible plus any subsidies on products received. The division of production in construction between building construction and civil engineering is based on the classification of types of construction (CC). Statistical population: Production: sections B, C, D of NACE (D353 excluded); Base period: Year 2010 = 100. http://epp.eurostat.ec.europa.eu/cache/ity_sdds/en/is_esms.htm 2.9 OECD Business Confidence Indicator (BCI) for Europe The Composite leading indicators (CLI), which BCI is part of, comprises a set of component series selected from a wide range of key short-term economic indicators to ensure that the indicators will still be suitable when changes in economic structures occur in future. While theory says that a turning point in the CLI signals a turning point in the reference series, such turning points, in reality, are determined by a complicated process. Therefore, one often needs to wait for several periods to draw a more definite conclusion. A useful way to exploit the information in CLIs is to take their year-on-year growth rate. The standardised BCIs represent only the manufacturing sector. BCI shows a longterm trend in industrial production (with a 6-month time-lag). An increase over 100 means expansion; a decrease above 100 means a downturn; an increase below 100 is an upturn and a decrease below 100 is a slowdown. http://stats.oecd.org/mei/default.asp?lang=e&subject=5 2.10 Purchasing Managers Index (PMI) The Global Report on Manufacturing is compiled by Markit based on the results of surveys covering 9,000 purchasing executives in 30 countries. Together these countries account for an estimated 86% of global manufacturing output. Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease. http://www.markiteconomics.com/survey/page.mvc/aboutpmidata 13
Document prepared by Maret Veiner, Head of Intelligence Department, CECIMO CECIMO aisbl 66, avenue Louise 1050 Brussels Belgium Tel: +32 2 502 70 90 Fax: +32 2 502 60 82 www.cecimo.eu For more information: information@cecimo.eu