European construction equipment market performs relatively well

Published 22/4, 2016 at 16:09

The construction equipment sector saw a single-digit decline of 2.5% in 2015, primarily attributable to the market situation in Russia. Overall, however, there were encouraging signs of improvements in machinery demand. Building construction equipment performed better than civil engineering equipment, earthmoving and road construction machinery. These are the main findings of the Committee for European Construction Equipment Annual Economic Report 2016.

Performance in 2015

The growth of the European construction equipment sector seen in 2014 could not be sustained in 2015: sales in Europe declined slightly by 2.5%. “However, what looks like bad news needs to be interpreted carefully,” said CECE economic expert Sebastian Popp. “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. France had a very bad year, but showed clear signs of stabilisation towards the last quarter.”

Central and Eastern European countries and Southern Europe were the pillars of growth, though from very different start points. Germany, the UK, and the Nordic Countries remained the anchors of stability.

The continued free fall in the Russian market was a decisive factor distorting the overall market statistics. 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.

In an environment that lacked any clear drivers of growth, and against a backdrop of declining world equipment sales of 11%, Europe should be seen as a positive example. What remains notable, is that the European construction equipment sector is an exporting industry. Even with declining worldwide sales, exports from Europe to the world grew slightly by 4% in the first 10 months of the year.

 

Outlook 2016

The CECE Barometer, grew significantly in the last quarter of 2015 and the first quarter of 2016, suggesting a positive first half of the year for equipment sales.

In the European market in 2016, it seems likely that the recovery in Southern Europe will continue, particularly in Italy and Spain. Fuelled by infrastructure investments, Central and Eastern Europe should continue its growth. France could win back a portion of what was lost in 2015. The high volume markets like Germany, the UK, Nordic countries, Benelux, and Austria and Switzerland are not expected to see further growth, but a slump is not expected either.

Turkey has the potential to further accelerate growth, but political issues could limit investment activity. However, no significant change is anticipated for Russia. Overall, this translates into a modest single-digit growth rate as the most realistic scenario for sales in Europe.

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