2014: After a slowdown in 2013, turnover in 2014 will increase by 1.1%

Orgalime estimates that the engineering industry’s turnover in the European Union just exceeded €1700 billion in 2013, which is still below the levels achieved overall in the EU in 2007. 

However, Orgalime industries showed a strong growth in the first quarter of 2014. Although, in the second quarter turnover decreased in all sectors of the industry, Orgalime economists estimate that a modest 1.1% growth in turnover will be achieved for 2014 as a whole. 

Commented Sandro Bonomi, President of Orgalime, “Credible economic forecasts and forward-looking surveys revised their expectations towards a slight deterioration in worldwide and foremost European economic performance. However, Orgalime economists estimate that a 1.1% turnover growth in 2014 for the European engineering industries should be achieved. Positive expectations should mostly be attributed to strong efforts at the level of innovation, but we are still seeing a performance at the level of growth which is well below historical trends. This is disappointing but not surprising given the morose investment climate in Europe.” 

It is indicative that the IMF announced a global growth forecast of 3.3% for 2014, which is 0.4% lower than the expectations in April. For 2015, the IMF has also lowered its growth forecast to 3.8%. Moreover, the OECD’s composite leading indicators point to a slowdown in the growth rates for Europe, whereas they foresee stable growth for other major economies. 

Concluded Adrian Harris, Director General of Orgalime, “The economic indicators only represent the reality of European companies which continue to face uncertainty stemming from internal and external risks. These are namely:

  • Low inflation in the EU  and the possibility of a Japan-style deflation scenario
  • Lingering uncertainty about the commitment of regulators to really make the necessary effort to attract  manufacturing investment to Europe
  • Uncertainty about the Chinese economy and its possible slowdown
  • Geopolitical concerns, especially with the situation in Ukraine and its consequences on trade relations with Russia, a significant trading partner for the engineering industries and the conflicts in the Middle East which may lead to rise in crude oil prices.”

Nevertheless, the European engineering industries remain Europe’s major industrial employer, with some 10 million employees. While turnover contracted by 1.5% in 2013, employment decreased by 0.9%. In 2014 and 2015, employment is expected to stabilise, but it will require a much clearer signal that manufacturing industry, Orgalime industries’ main clients are reinvesting in Europe again before we can expect to see any fundamental change at this level.

Ends

Published
5 November, 2014
Category
Press release
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