European engineering industry

Economic growth in most industrialised countries has accelerated over the last 3-4 quarters. This has had a positive effect on the European engineering industry. On the basis of preliminary data, the third quarter of 2004 will still be rather strong; the preliminary forecast for overall growth in output in 2004 for the engineering industry in Europe is 3.3 percent, a somewhat higher figure than foreseen earlier this year. Exports
have been the main driver of the improved performance of the industry, whereas domestic demand within most European countries has been weak, as has been gross fixed capital formation.

Despite the acceleration in output for European engineering companies in 2004 compared to the two previous years, set within the international context, this performance appears rather modest. Output of growth in the US and Japanese engineering industries will reach double-digit growth this year.

There are unfortunately some dark clouds on the horizon that will constrain growth in 2005: the surge in input prices, in particular, will squeeze profit margins, thus slowing down overall European growth. As a result, overall growth in output of the European engineering industry is expected to be limited to some 2.5 percent in 2005.

28 October, 2004
Press release

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