Q2 2012 activity remained weak
Large country differentials as capacity shifts from west to east
Sluggish demand outlook 2013
Supply pressures will remain high
Production activity in the electric domestic appliances industry in the EU continued to decrease at a moderate pace in the 2nd quarter of 2012.
At the country level, growth differentials were significant, ranging from a continued double digit drop in output in Italy and double-digit growth in Poland.
This reflects the general shift in final assembly of home appliances towards Central and Eastern Europe and beyond. Consequently, since 2000 production capacity in Central Europe has increased significantly. This in turn is reflected in strong employment growth and enhanced export performance of these countries.
Consumer retrenchment is currently the main drag on demand for electric domestic appliances in the EU. The current weakness in the residential property markets across the EU has also a dampening effect on large appliances such as fridges and freezers, cookers, ovens, microwaves and dish washers.
Moreover, competition in the shrinking market intensified due to the strong growth of electrical household appliance in South East Asian countries and China. Current forecasts show the continuation of rather bleak market fundamentals for the coming quarters, probably well into 2013.
Downstream demand at the consumer level will only improve if economic confidence strengthens from current rather depressed levels. The specific timeframe for any improvement will depend on many factors, including the labor market, direct and indirect tax pressures and their effect on spendable income.
Better sentiment could also translate into improving momentum in the residential property sector in the EU if it is supported by access to mortgage credit becoming less difficult. On balance, total output in the electric domestic appliances sector in the EU is forecast to contract by 1.5% in 2012.
In 2013 production activity is forecast to increase by around 1.5%. Particularly Poland and the Czech Republic expect activity to gain further strength as recently installed capacity comes on stream.
