August 23, 2016

The bayme vbm survey of the Bavarian M+E industry, Summer 2016

The metalworking and electrical (M + E) industries are the backbone of Bavaria’s economy, employing more than 815.000 people today. In 2015, they achieved sales of 243 billion Euro – 60 percent of which were generated abroad.

In a recent business survey, conducted in the summer of 2016 by bayme vbm – The Bavarian Employers’ Associations for the Metalworking and Electrical Industries, the Bavarian M + E industry reported a positive assessment of the current business climate.

The domestic and international business climate

The bayme vbm survey, which covers the first two quarters of 2016, continues a trend seen in the previous edition – a growing divergence between domestic and international activities.

The assessment of the current business climate in Germany rose by 4.1 to +53.6 points compared to the last survey in December 2015. In contrast, the international assessment fell from +50.1 to +42.1 points over the same period.

This development is set to continue: In terms of domestic business expectations, 16 percent of the polled M + E companies anticipate an improvement, whereas six percent expect the situation to worsen. In contrast, the international outlook is significantly bleaker with a negative balance of expectations of -3.9 points – down from +3.2 points in December 2015.

Growing risks in the world economy

The survey reflects the ongoing weakness of the world economy and the increase in global economic risks – from the conflict in Syria to the growing threat of Islamic terrorism.

The vote of the United Kingdom in June 2016 to leave the European Union has increased the market uncertainty. After all, the UK is Bavaria’s third largest export market for M+E products. Almost ten percent of the exports of Bavaria’s M + E industries went to the UK in 2015.

Production and investment plans

Disparity between the domestic and international assessment was also conveyed by the production and investments plans of the Bavarian M + E industries.

Compared to December 2015, the balance of the domestic productions plans rose by 9.4 to +24.1 points; the balance of domestic investment plans increased by 8.4 to +18.6 points. At the same time, the balance of international production plans dropped by 7.9 to +34.9 points; the balance of international investment plans decreased by 18.5 to +33.9 points.

This shows that while the Bavarian M + E companies remain more likely to increase production and investment abroad rather than domestically, both assessments are moving closer.

Employment plans

Despite the current uncertainty, the Bavarian M + E companies are planning to take on more staff. 44 percent of companies want to create new jobs in Germany in the coming months. Eight percent are worried about cutting jobs. Therefore, the balance of positive and negative responses rose from +16.8 to +36.2 points since December 2015.

In terms of creating jobs abroad, the balance stands even higher at +59.2 points – an increase by 21.9 points since December 2015. However, a growing number of companies report difficulties in hiring skilled workers, particularly IT specialists.

To read the complete survey, please follow the link (German only).