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GRUNDFOS MACHINING INDUSTRY

ISSUE 3, 2015 - APRIL

UPDATE ON THE ECONOMIC SITUATION AND DEVELOPMENT IN SELECTED SECTORS

MOVING FORWARD SLOWLY

business indicator report

bethinkinnovate

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CONTENTSEconomic Expectations for Key Countries and Industry Sectors(Source: ZEW indicator, ZEW, 21. April 15)

New Passenger Car Registrations in Europe (Source: ACEA, 16. April 15)

Machine Tool Order Intake in Germany(Source: VDMA, April 15)

Fig. 4, Machine Tool Order Intake in Japan(Source: JMTBA, April 15)

Fig. 5, Machine Tool Order Intake in U.S.A.(Source: AMT, 13. April 15)

Fig 6, German Business Climate – Industry and Trade (Source: Business Climate Indicator, Ifo Institute, 25. March 15)

Fig 7, The Grundfos Global Automotive Indicators(Source: MarkLines.com, April 15)

Fig 8, The Grundfos Raw Material Price Index(Source: London Metal Exchange, Steel Business Briefing, CME Group, March 2015)

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ABOUT GRUNDFOS

INDUSTRY INDICATORS

CONTENTS

This quarterly newsletter can give you a general idea of which way the wind is blowing in the machine tools industry. It is a special supplement to our subscribers of Knowledge Link, our website for the machining industry.

Almost all the charts and graphs here are publicly available. They come from the three major machine tool associations – in Ger-many, Japan and the United States – as well as global surveys from market analysts.

We make the final graphs ourselves, the Grundfos Raw Materials Index and the auto-motive Monthly Production Output by coun-try and manufacturer. We build the latter up from available automotive production figures. Grundfos Machining Industry seg-ment uses automotive production statistics, because that market is such a big part of the machine tools industry.

Based on that, we try to estimate how the coming one- to three months will look.

Why do we want to share these statistics? Because we have a common interest in see-ing how the market is doing. So please: read these statistics and comments as indicators alone.

We publish a full version of the Grundfos Industry Indicators quarterly in three lan-guages, as well a monthly version in English only.

The Grundfos Industry Indicators Copyright 2015 Grundfos A/S. Permission to reprint graphs, tables and data has been granted to Grundfos from the various organisations represented in the publication. If you have comments or questions on the data from those organisations, please contact them di-rectly with the links provided. We welcome your other comments.



Grundfos analyst: Moving forward slowly

Economic Expectations for Key Countries and Industry Sectors

We see moderate growth in the US and Europe, though the newest indicator for future business expectations in Ger-many has dampened. Progress in Asia has slowed down. The large economies Brazil and Russia are stagnating or decreas-ing, respectively.

Car production at the beginning of 2015 is on the previous year’s level and Japanese machine tool manufacturers con-tinue their success story.

The current market situation seems predominantly opti-mistic.

However, a stronger upturn is obstructed by political con-flicts (e.g. Russia/Ukraine, Middle East, Greece), as well as uncertainty about the development of key factors like cur-rency rates, interest rates, oil and housing prices.

Frank Baake, Senior Strategy & Intelligence Analyst

The Centre for European Economic Research (ZEW) writes,

“In April 2015, the ZEW Indicator of Economic Sentiment for Germany has fallen for the first time since October 2014. Compared to the previous month, the indicator has declined by 1.5 points to a reading of 53.3 points. "The German economy is in good shape. A stable labour market and increasing wages are strengthening confidence and boosting consumption. However, the current weakness of the world economy is dampening export prospects and reducing the scope for further improvements of the eco-nomic situation in Germany," says ZEW President Professor Clemens Fuest. The assessment of the cur-rent situation in Germany has improved notably. Increasing by 15.1 points, the index now stands at 70.2 points.

The financial market experts' sentiment concerning the economic development of the Eurozone is im-proving. ZEW’s Indicator of Economic Sentiment for the Eurozone has increased by 2.4 points to a read-ing of 64.8 points.”

The ZEW Indicator of Economic Sentiment is ascertained monthly. Up to 350 financial experts take part in the survey. The indicator reflects the difference between the share of analysts that are optimistic and the share of analysts that are pessimistic for the expected economic development in Germany in six months. The survey also asks for the expectations for the Euro-zone, Japan, Great Britain and the U.S.A.

For more information, visit ZEW’s website at zew.de.

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ZEW Indicator of Economic Sentiment April 2015 (Germany)

ISSUE 3, 2015 - APRIL4 | GRUNDFOS MACHINING INDUSTRY


For the German Machine Tool Industry, the order intake in February was -9.0% compared to the same month in 2014. For the first two months of the year it was -9.3%.

For more information, please visit the VDMA’s website at vdma.org.

New Passenger Car Registrations in Europe

Machine Tool Order Intake in Germany

“In March 2015, demand for new passenger cars in the EU increased for the nineteenth consecutive month (+10.6%), marking the highest monthly growth since last March and totalling 1,604,107 units. All major markets contributed positively to the overall expan-sion, especially Spain (+40.5%) and Italy (+15.1%) which posted double-digit growth, followed by France (+9.3%), Germany

(+9.0%) and the UK (+6.0%) that also performed better than in March 2014.

In the first quarter of 2015, new passenger car registrations increased by 8.6%, totalling 3.5 million units (3,527,704).”

For more information, see ACEA’s website at acea.be.

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Machine Tool Order Intake in Japan

The order intake for the Japanese Machine Tool Industry in March 2015 was +14.6% compared to March 2014 (11.9% up from February 2015).In the 3 months of 2015 the growth was +20.8%.

Machine Tool Order Intake in U.S.A.

“February U.S. manufacturing technology orders totalled $304.74 million according to AMT – The Association for Manufacturing Technology. This total, as reported by com-panies participating in the USMTO program, was down 10.6% from January’s $341.02 million and down 14.8% when compared with the total of $357.86 million reported for February 2014. With a year-to-date total of $645.76 million, 2015 was down 9.8% when compared with 2014.”

The United States Manufacturing Technology Consump-tion (USMTC) report, jointly compiled by the two trade associations representing the production and distribution

of manufacturing technology, provides regional and national U.S. consumption data of domestic and imported machine tools and related equipment.

Analysis of manufacturing technology consumption provides a reliable leading economic indicator as manufacturing industries invest in capital metalworking equipment to increase capacity and improve productivity.

For more information, visit the website at amtonline.org.


For more information, please visit the JMTBA’s website at jmtba.or.jp

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“The Ifo Business Climate Index for Ger-man trade and industry rose to 107.9 points in March from 106.8 points last month. The index reached its highest level since July 2014. Companies were more satisfied with their current busi-ness situation. They also expressed far greater optimism about future busi-ness developments. The German econ-omy continues to expand.

In manufacturing, the climate indica-tor rose once again. Manufacturers were more satisfied with their current business situation. They were also clearly more optimistic about future business developments. Production plans reached their highest level since May 2014.”

The Ifo Business Climate Index is based on ca. 7,000 monthly survey responses of firms in manufacturing, construc-tion, wholesaling and retailing. The firms are asked to give their assess-ments of the current business situa-tion and their expectations for the next

six months. They can characterise their situation as “good,” “satisfactorily” or poor” and their business expectations for the next six months as “more fa-vourable”, “unchanged” or “more unfa-vourable.” The balance value of the cur-rent business situation is the difference of the percentages of the responses “good” and “poor”; the balance value of the expectations is the difference of the percentages of the responses “more favourable” and “more unfavourable.” The business climate is a transformed mean of the balances of the business situation and the expectations. For calculating the index values, the trans-formed balances are all normalised to the average of the year 2000.

The CESifo Group, consisting of the Centre for Economic Studies (CES), the Ifo Institute for Economic Research and the CESifo GmbH (Munich Society for the Promotion of Economic Research) is a research group unique in Europe in the area of economic research. It combines the theoretically oriented

economic research of the university with the empirical work of a leading Economic research institute and places this combination in an international environment.

For more information, visit the website at cesifo-group.de.

Ifo Business Climate Germany:

German Business Climate – Industry and Trade6


Data source: MarkLines Co. Ltd

Data source: MarkLines Co. Ltd

The Grundfos Global Automotive Indicators

The six main manufacturers produced -2.8% in February (vs. last year). For the first two months of 2015 it is -0.5%.Production in the 4 main vehicle producing countries decreased by -3.0% in February compared to same month last year and shows 0.6% growth for the first two months of the year.


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The Grundfos Raw Materials Price Index

Raw Materials Update

Raw Materials Price Index, general status April 2015

Source: London Metal Exchange, Steel Business Briefing, CME Group.

July 2014 = 100

Grundfos Cost Analyst Menno Buikema comments on the price fluctuations of raw materials and their impact on the manufac-turing industry. He writes:

In February, the prices of relevant com-modities were relatively stable with the exception of Molybdenum and Crude Oil.

The crude oil price increase reflects news of falling U.S. crude oil rig counts, reductions in capital expenditures by major oil companies, as well as lower than expected Iraqi crude oil exports.

Molybdenum prices have decreased by 13.5% compared to last month, which

brings them to an average price of 17,173 USD per ton, which is an almost 6-year low point.

Although prices of Molybdenum have been relatively volatile over the last year, this low point is noteworthy, particularly since the development throughout the month suggests that the bottom price has not been reached yet.

Analysts blame oversupply on the mar-ket, which has resulted in demand for low prices. Another reason for the low demand is the infrequent need for Mo-lybdenum from the gas and oil industry this year, as well as the generally weak European and Chinese economy.

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Source: London Metal Exchange, Steel Business Briefing, CME Group.


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