Germany’s manufacturing industry has
recovered from the economic nosedive of
autumn 2008 more quickly than originally
expected according to Deutsche Bank Research. By the time the recession bottomed
out in April 2009 production had been cut
back by 24% in all. Three-quarters of this
decline has been recouped in the meantime.
Last week Germany's economics ministry reported that industrial orders jumped by
more than 5% in November compared with the previous month. Total orders are up
22% on November 2009 and last November's 5.2% rise followed a 1.6% increase in
October. Orders from countries outside the Eurozone were up almost 15% in
November, reflecting the strong position Germany has in emerging markets. Meanwhile, on Tuesday, German industrial giant Siemens said it is has made a good start to its
new fiscal year amid "a very strong increase in new orders."
Europe's biggest industrial group said that it expects revenue and profit for
its fiscal first quarter - - the October-December period - - to be higher than a
year earlier. Siemens said revenue for the period is "expected to
considerably exceed" the prior-year level of €17.4bn, and income is expected
to be above the previous year's €1.5bn.
According to a statement from the group, CFO Joe Kaeser told investors in New
York that the company is "off to a good start" to its 2011 fiscal year.
DBR economist, Philipp Ehmer, said the industrial production trend is most visible in the cyclically
driven capital goods sector: output had
fallen by over 30% in segments such as
chemicals, metals and electrical engineering
- - and by no less than 44% in the car
Carmakers received a very
substantial boost from government stimulus
packages, though, and of course from the scrappage bonus in particular. As a result,
the car industry has now made up nearly 90%
of the ground lost during the
recession-induced slump. Along with the
chemicals and plastics industries, which
mainly produce inputs for other sectors, it
is one of the sectors that have recovered
By contrast, the mechanical
engineering industry is considered a
cyclical laggard that reacts only slowly to
changes along the curve. It starts to
benefit once industry resumes investment in
new production capacities. This is why
mechanical engineering output has so far
only rebounded by slightly more than 50%
according to the economist.
However, incoming order volumes indicate
above-average growth for 2011.
Ehmer said German industry is unlikely to be able to
maintain the rapid pace of recovery in 2011.
The upswing is losing some momentum.
Nevertheless, the manufacturing sector has
the potential to match the pre-crisis level
by spring 2012. This would mean that German
industry might have digested the worst
recession since World War II in the space of
not more than four years. A few capital
goods segments - - carmakers, plastics and
chemicals - - are likely to complete their
recovery even before the end of 2011.