Machine exports suffer from trade conflicts

The export momentum has slowed considerably. The USA leads the ranking in terms of the most important export countries, ahead of China.

Global trade conflicts and an increasingly weak economy are weighing on the export business of mechanical engineering companies from Germany. According to the Federal Statistical Office, machine deliveries in the first six months of this year increased by a nominal 0.9 percent or 0.8 billion euros to 89.2 billion euros compared to the previous year. The export momentum has thus slowed considerably.

In the first quarter, exports (according to corrected figures) had still reached a plus of 3.8 percent. In the second quarter (April - June) of 2019, on the other hand, mechanical engineering companies recorded an export decline of 1.8 percent to 44.7 billion euros.

USA expands lead as most important single market

Between January and June, exports to the United States rose by 7.8 percent to 9.96 billion euros thanks to an excellent start into the year. The USA thus accounts for 11.2 percent of total German machinery exports.

Exports to China increased by only 0.6 percent to 9.72 billion euros over the same period, giving China a 10.4 percent share of total exports. "Developments in China are not surprising, as industrial production is growing as slowly as it did in 2002," explains Wiechers.

France, Italy and the United Kingdom follow in the ranking. Export growth was particularly positive to France in the first six months (plus 6.8 percent to 6.26 billion euros). By contrast, the second quarter of 2019 had a negative impact on export business with Great Britain, with the result that mechanical engineering recorded an export decline of minus 1.7 percent to 3.85 billion euros between January and June.

In the first quarter, the industry recorded a plus of 8.8 percent in exports to the United Kingdom. "Now the Brexit is showing its unpleasant consequences. At the beginning of the year, many orders from Great Britain were accelerated in order to avoid impending trade barriers," says the VDMA chief economist. "This has now come to an end. Exports to Italy also shrank in the first six months of the year by 5.9 percent to 4.03 billion euros.

Exports to Japan rise strongly

Total exports to the EU countries increased by 1.7 percent to 43.1 billion euros between January and June. Business with Turkey (minus 11.4 per cent to 1.58 billion euros) and Russia (minus 8.0 per cent to 2.64 billion euros) remained difficult. Exports to Japan continued to develop positively (plus 12 percent to 1.49 billion euros). Japan thus recorded the largest growth of any country within the top 20 markets for German machinery exports.

Source and photo: VDMA