German Engineering Output Propelled by Chinese Demand

By Nina Adam Features Dow Jones Newswires

Germany's engineering sector is humming with turnover likely to hit a record high this year due to strong Chinese orders, Germany's VMDA industry group said Tuesday.

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"Plants and machinery Made-in-Germany remain in demand, globally," said Carl Martin Welcker, the president of the VDMA, which represents more than 3,200 mostly mid-size companies.

Illustrating this trend, output of German plant and machinery is forecast to jump 3% this year, which would be the strongest increase since 2011. Turnover in the sector is likely to hit 224 billion euros ($264 billion) in 2017 and reach EUR233 billion in 2018, the VDMA said.

But while exports to China and the U.S. surged in the first nine months of the year, demand from the U.K. was weak, clouded by Britain's forthcoming exit from the European Union.

"Brexit is a serious concern for us," said Mr. Welcker, as German engineering exports dropped 4.5% in the nine months through September compared with January-September 2016.

Should Britain leave of the EU's customs union, then Germany's machinery makers may face additional export costs of "more than EUR180 million a year," the VDMA said. Additional import charges could amount to EUR44 million a year "plus extra expenses for the import of components," it said.

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Write to Nina Adam at nina.adam@wsj.com

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December 12, 2017 05:02 ET (10:02 GMT)