European CE Market Sees Signs Of Improvement, Says CECE

17 March 2016

The construction equipment sector in Europe saw a single-digit decline in 2015, primarily attributable to the market situation in Russia. Overall, however, there were encouraging signs of improvements in machinery demand, according to the annual economic report published by the Committee For European Construction Equipment (CECE).

Headquartered in Brussels, the CECE represents European national associations consisting of 1200 companies involved in the construction and mining equipment industries.

The European construction equipment industry represents about 5% of total EU engineering output and accounts for approximately 20% of worldwide production of construction equipment.

The growth of the European construction equipment sector seen in 2014 could not be sustained in 2015, CECE said, noting sales in Europe declined slightly by a moderate 2.5%. However, “what looks like bad news needs to be interpreted carefully”, said Sebastian Popp, economic expert at CECE. Within Europe, market developments were highly diverse, a phenomenon which is apparent even in the large volume markets.

“We saw growth of almost 40% in Italy, but also declines of 25% in France,” said Popp. “France had a very bad year, but showed clear signs of stabilization towards the last quarter.”

The continued free fall in the Russian market was a decisive factor distorting the overall market statistics. In fact, sales in Europe excluding Russia saw growth of 3.5%, ranking Europe without Russia in the top three performing regions in the world in 2015, behind only the Middle East and India.

Looking at the European market in 2016, CECE said it seems most likely that the recovery in Southern Europe will continue, particularly in Italy and Spain.

Highlights of the report included:

– Growth within the Eurozone approached 1.5% in 2015, after 0.9% growth in 2014, following two years (2012 and 2013) of recession.

– The European residential construction market saw 1.8% growth in 2015, confirming that a solid recovery is still some way off, CECE said.

– Germany’s residential construction market grew 2.7% in 2015. The recent influx of refugees will provide further stimulus to demand, especially in urban areas, CECE noted, particularly related to multifamily buildings, the report indicated.

– The housing market in the United Kingdom is booming as in the three-year period

2013 to 2015, new investment increased on average by 12% per year.
– In Italy, residential production continues to be the weakest segment within the construction sector and in 2015 registered its eighth consecutive year of decline, marking the lowest level of residential construction activity on record, CECE said.

– By segment, commercial construction accounts for the largest share of non-residential construction at 20% of total volume. New office construction follows with a share of 17% and Industrial construction is ranked third in output with a share of 16%.

– Demand for equipment in the global mining industry has been declining since 2012, when commodity prices and capital expenditure peaked. The second half of 2015 showed a continuing continued decline in the value of shipments to the mining industry, CECE said, noting that overall, current shipments are nearly 75% below the peak level reached in the first quarter of 2012.

– The only positive news in mining came in the fourth quarter of 2015, when the number of units shipped rose by 6%. This reflects a pickup in shipments of smaller, lower value classes of equipment, while heavier classes of equipment declined, CECE said.

The full report can be downloaded here.

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