EUROFER's October report on the Economic and Steel Market Outlook 2009-2011 shows that output of electrical domestic appliances fell by 19.3% YoY in the second quarter of 2009, to the lowest level since the late nineties. Production in the first half of 2009 was 13% YoY down.
The major factors leading to this drop in output have been overall weak confidence levels, rising unemployment, restrictions in consumer credit and depressed property markets across Europe. The latter impacted both sales of new existing homes while having negative wealth effects as well. The number of residential property transactions has seen a significant reduction since the start of the year. Consequently, demand for electrical domestic appliances is well below levels registered in previous years.
The outlook for the coming quarters is for a continuation of difficult business conditions for the electrical domestic appliance producers in Europe. Demand will continue to suffer from weak consumer sentiment due to the expected rise in unemployment. This will certainly act as drag on private consumption growth.
The housing sector downturn is also forecast to hold on for the time being. Another concern is increasing competition from Asian producers trying to expand their potential market share in Europe. Following the close to 13% drop in EU output expected for 2009, the outlook is for a marginal pickup in the 2010-2011 timeframe. Prospects for Central European countries are relatively positive owing to recent investment in modern production facilities and their advantage in terms of labor costs and availability of skilled workforce.
