European Commission Economic Sentiment Indicator, June 2023: The European Commission (EC) draws from a range of surveys to construct confidence indicators for five sectors of the economy and uses these to make up its Economic Sentiment Indicator (ESI).
There was another fall in the overall ESI in June* for both the EU and the Euro-zone but although this was the fifth month in a row that this has happened, we are not quite back to the low point that we saw in October 2022. This reduction was caused by lower confidence in industry, services, construction and, to a lesser extent, retail trade; consumer confidence continues its recovery from the trough of last Autumn which had been the main driver of the low point in the overall ESI in that period.
The sharpest downturn in confidence came in the industry sector as expectations for production in the coming 3 months and assessments of current order books both deteriorated further and stocks of finished goods were increasingly reported to be above normal. There are two other questions which are reported but not included in the calculation of the confidence measure showed that export order books deteriorated further but there was an improvement in output over the past 3 months following the slump in this measure in the previous survey.
Among the major EU economies, the SI fell sharply in Germany and to a lesser extent in Italy, Netherlands and Spain; it was broadly flat in Poland and improved modestly in France. The ESI is calculated against a base set by the long-run average reading so this is adjusted marginally each month when the new reading is recorded. Most of the countries continue to have an ESI below their long-run average with Bulgaria, Croatia, Cyprus, Greece, Italy, Malta and Romania the exceptions whose reading is above 100; the EU candidate countries also participate in this survey and Albania and Montenegro also have an ESI reading above their long-run average. Spain and Turkey both slipped back below the long run average this month and, on the other side, Portugal saw a strong improvement but was just a fraction off getting back to a reading of 100.
* Note that although dated June, the data collection period was from 1st to 22nd of that month, so the trends really refer to May and the 3-month periods up to and after this month.
You can download the EC report and statistical annex from their web-site at https://ec.europa.eu/info/business-economy-euro/indicators-statistics/economic-databases/business-and-consumer-surveys/download-business-and-consumer-survey-data/press-releases_en or you can request it from MTA.
CECIMO Economic & Statistical Toolbox, 1st Quarter 2023: The latest edition of the CECIMO Toolbox was released this week. The Toolbox document groups information into 6 categories covering historical data for the sector, demand, investment, the business climate, general economic indicators and information on related sectors. The date reference refers to the main period covered by this edition, although some more recent data is included for a couple of the series.
The highlights of the latest report include:
- Orders for machine tool manufacturers in the CECIMO8 group (which covers the major producing nations as a single figure) were -14% lower than the record level seen in the 1st period of 2022; however, the order level was broadly unchanged from the previous quarter (Q4-22).
- Business climate indicators continue to show an uncertain situation. CECIMO’s own barometer indicator showed a reduction compared to the previous quarter but it was still positive. On the other hand, the global manufacturing PMI is still in negative territory and the euro-zone reading is negative and weakening.
- Machine tool production across the CECIMO area (15 European countries) is expected to increase by around +8% during 2023 which would return it to 2019 levels.
- The Toolbox also contains information from the recently published Global Machine Tool Report which has the latest data for 2022. This shows that global production was approximately €79.5 billion; of this, €55.9 billion was metal cutting machinery and €23.5 billion EUR in metal forming.
- The total represents an increase of around +12% in global production compared to 2021 and, significantly, growth of +8% compared to 2019. Within the global total, CECIMO’s machine tool production rose by +12% in 2022, to a total of €25.1 billion.
You can access the Toolbox via the CECIMO website at https://www.cecimo.eu/economic-data/toolbox/ (unfortunately, the file is too large to attach to this report) – please indicate that you are a member of MTA when requesting a copy (despite what it says on this link, the document is free to members of the association); alternatively, we can try to email this if you contact Geoff Noon (email: [email protected]) but this is a large file (22Mb) that may get blocked by some systems.
This is also the route to obtaining the new CECIMO Global Machine Tool Report mentioned in the article above but you can also download this from the MTA website (members area) at https://www.mta.org.uk/members-area/global-mt-report.
USMTO and CTMR, April 2023: The US Manufacturing Technology Orders (USMTO) programme tracks orders in the US market, based on the reports from participants. In the first third of the year, orders were -13.5% lower than in the same period of 2022 (January to April). The 12-month rolling trend – effectively an annualised rate of change – was down by -16.4% on the level of the previous 12 months.
After a reasonable start to the year, the AMT Press Release notes that the 2nd quarter has started with a weak level of business in April; there was a sharp downturn in orders from job shop – indeed the month-on-month change for this category of customers was the largest decline since January 2017 – and orders from the automotive sector were also down although, in this case, it was at least partly because of a very strong March figure.
Looking at the regional pattern for the first four months of the year, only the North-Central-East area saw any growth in orders, although the South-Central region only fell by -1%; at the other end of the change spectrum, orders fell by -33.3% in the South-East and -40.5% in the West.
The US Cutting Tool Market Report (CTMR) tracks orders for tooling on a similar basis. Here we have the opposite trend for this part of the manufacturing technology market with business in the first part of 2023 running at +15.2% above the level of the same period (January to April) 2022. The 12-month rolling average is +12.9% higher than in the previous block of months although the level has not yet reached the pre-pandemic peak.
The press release for this survey notes that the level of purchasing in April was down on the first three months of the year (although still higher than in April 2022) and suggests that this may be a modest de-stocking in the distribution chain. There is no regional analysis for the cutting tool report.
You can download the press releases for the two surveys from the AMT web-site at www.amtonline.org/topic/intelligence, with the CTMR release also published on the USCTI web-site at www.uscti.com; alternatively, you can request either or both releases from MTA and we can make sure you get them when they are published each month.
Aerospace Manufacturing Outlook: In the run up to the Paris Air Show last week, both the of the major civil aircraft manufacturers – Airbus and Boeing – have published their long-term outlooks for the demand for aircraft. According to reporting by the Aviation Week website (see https://aviationweek.com/air-transport/location/boeing-little-rosier-airbus-20-year-outlook-new-airliners), the US based plane maker has a rosier outlook than Airbus.
Boeing are predicting sales of 42,600 new aircraft by 2042 with the main assumption being that passenger traffic continues to outpace the growth of the global economy and airlines replace half of the global fleet with newer and more efficient models.
Airbus’s view is that the 20-year demand for new planes will total 40,850, or which 32,600 will be narrow-bodies and 8,200 wide-bodied aircraft.
Boeing thinks that Asia-Pacific markets will account for more than 40% of total demand for new passenger aircraft in the 20-year forecast horizon, with Europe and North America both at around 20% of the total.
You can click on the link above to see the Aviation Week report. The full documents from Airbus are on their website at https://www.airbus.com/en/products-services/commercial-aircraft/market/global-market-forecast while Boeing’s forecasts are available at https://www.boeing.com/commercial/market/commercial-market-outlook/index.page?.