VDMA Monthly bulletin July 2016 | Volkswirtschaft und Statistik Monthly bulletin

VDMA Incoming orders in Germany Mechanical engineering | Volkswirtschaft und Statistik Monthly bulletin German customers are a bright spot In May, incoming orders fell short of the previous year by 4 percent. International orders sank by 10 percent. As seen more frequently in recent months, demand from non- euro countries fell once again, this time by 14 percent. This was partly offset by growth of 3 percent from euro partner countries. Domestic orders developed well. They grew by 8 percent. In the first five months of the year these books show 4 percent growth. July 2016 Page 2 |

VDMA Production of German mechanical engineering | Volkswirtschaft und Statistik Monthly bulletin Last year, production of machinery and equipment in Germany grew by 0.8 percent. Before the annual adjustments, the books showed a decline of 0.3 percent. The adjustment was unusually large because there was a number of erroneous reports. In the first four months of 2016, production increased by 0.9 percent. However, VDMA economists expect a sharp downward adjustment of the April value. The forecast remains one of stagnation for 2016 as a whole. July 2016 Page 3 |

VDMA Capacity utilization in German mechanical engineering | Volkswirtschaft und Statistik Monthly bulletin Capacity utilization stood at 84.1 percent in April 2016, only just below the long-term industry average. The record low since 2011 was 83.6 percent in January The all-time high was reached in July 2011 at 89.9 percent. July 2016 Page 4 |

VDMA Employees in German mechanical engineering | Volkswirtschaft und Statistik Monthly bulletin April brought a seasonal decline in employ- ment in mechanical engineering compared to the previous month. In all, 1,010,000 people were permanently employed in the industry in April. Compared to the previous year, there was growth of 0.5 percent. The number of short-time workers was around 11,000 in November. The low in employment since 2011 was 909,000 people in January 2011; the record high was just under 1,019,000 in September July 2016 Page 5 |

VDMA German machine export | Volkswirtschaft und Statistik Monthly bulletin Exports of German machinery grew by 2.8 percent month on month in April Cumulatively, however, a nominal 1.1 percent less machinery was exported in the first four months than in the previous year. The EURO- 19 countries (up 3 percent) and the EU-28 (up 1.8 percent) both saw positive growth. The ASEAN countries (up 2.5 percent) also developed positively, albeit with great differences in the details. In the NAFTA region (up 1.2 percent) the momentum almost came to a standstill. Trade with China fell short of the previous year by nearly an eighth, mitigated moderately by the Russian decline (down 4.7 percent). OPEC and Mercosur trading is shuddering from a drop of over 20 percent. Exports to Egypt exceeded those to Saudi Arabia again for the first time in a while. July 2016 Page 6 |

VDMA Incoming orders in Germany for selected subsectors | Volkswirtschaft und Statistik Monthly bulletin In the last three statistically documented months (March – May 2016), 13 of the sub- sectors accounted for separately in the VDMA’s incoming order statistics posted growth. Four sub-sectors achieved growth rates of 20 percent or more. These were power systems (turbines), foundry machinery, construction equipment and building material machinery and machine tools. Textile machinery, mining equipment and machinery for metallurgical plants and rolling mills recorded downturns of 30 percent or more. July 2016 Page 7 |

VDMA Orders on hand in German mechanical engineering | Volkswirtschaft und Statistik Monthly bulletin The order backlog for the mechanical engineering industry was 5.8 production months in February An order range of just under six months is a good figure for the mechanical engineering industry, in view of an average throughput time of around three-and- a-half months due to reasons of technology. It shows that there are some order blocks here and there to ensure satisfactory levels of capacity utilization. On the other hand, lead times and supply bottlenecks for customers are not likely to be a real problem. July 2016 Page 8 |

VDMA Business situation and expectations Manufacturing industry in Germany | Volkswirtschaft und Statistik Monthly bulletin The index in the manufacturing industry improved in June. Industrial companies were again happier with their current business situation. Expectations were also mostly optimistic again for the first time since January. The order books have continued to fill up. Consumer goods manufacturers gave much more positive feedback this month. However, the value for the business climate was presented on 24 June and thus on the very same day on which the result of the Brexit referendum was announced. For this reason, the result of the referendum will not affect the business climate index until July. July 2016 Page 9 |

VDMA Economic situation of German mechanical engineering | Volkswirtschaft und Statistik Monthly bulletin July 2016 Page 10 |

VDMA| Volkswirtschaft und StatistikPage 11 | July 2016 Contact. Dr. Ralph Wiechers VDMA Volkswirtschaft und Statistik Lyoner Str Frankfurt Phone Monthly bulletin