German machine tool orders drop 13% in first half

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The VDW cites one-off effects as indication of stable domestic business.

A weak second quarter dragged orders for German machine tools down 13% in the first half of this year compared to the initial six months of 2011, according to the country's machine tool industry association, the VDW.

It said domestic orders slipped 6% in the first half and export orders dropped 17%. In the second quarter of this year, orders fell 20% compared to April-June 2011. Domestic orders slid 8%, and orders from abroad plummeted 26% versus the year-earlier period, the association said.

Wilfried Schäfer, the VDW's executive director, suggested that German industry is feeling the world's economic slowdown. “The months April to June have shown that the machine tool industry cannot disengage from global macroeconomic developments.”

However, Schäfer noted that export orders last year hit their highest level of growth in the second quarter, so the comparatively high decrease in demand from abroad also reflects a base effect.

The VDW said it expects international orders to stabilise in the second half of this year.

German order backlogs for machine tools were 8.4 months in June compared to 8.7 months in February, a level the VDW called "still very high". Capacity utilisation has risen from 95.1% in April to 96.9%, the VDW said.

It predicted that German machine tool production will rise 6% this year. “Although the macroeconomic situation has become significantly more problematical in recent months, due to the euro debt crisis and its effects on the global economy, and investors are unsettled, machine tool production output is set to keep on growing this year,” Schäfer said.

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