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EUROFER - Update on Electrical Domestic Appliances Industry in EU in Q1 of 2019

Steel News - Published on Tue, 14 May 2019

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Production activity in the electrical domestic appliances industry fell by 1.5% in the fourth quarter of 2018, continuing the downward trend in output registered in the third quarter of 2018. To a significant extent the fall in production reflects a base year effect due to rather strong growth in the third and fourth quarters of 2017. However, growth momentum in the electrical domestic appliances market has been losing momentum since the start of 2018.

Electrical domestic appliances industry activity in the fourth quarter of 2018 - Although at the individual country level the underlying trend in production activity still diverged, the final quarter of 2018 provided evidence of a rather broad-based cooldown in business conditions across the EU. Output growth was negative in Germany, the UK, the Benelux countries, Spain, the Czech Republic and Slovakia while production stabilised just above the level seen in France and Italy in 2017. Positive growth was reported in the other reporting countries.

Lower levels of consumer confidence and a moderation in growth of private consumption resulted in slowing demand for electrical domestic appliances following a period of relative market strength.

All in all, total production fell by 0.8% in 2018.

Electrical domestic appliances industry forecast 2019-2020 - EU demand for electrical domestic appliances is forecast to stabilise in 2019, before picking up speed again in 2020. Private consumption is expected to remain supportive to demand for household appliances, despite a mild moderation in growth over the forecast period compared with more dynamic growth in 2016 and 2017. Rising incomes and the strength of the labour market in combination with still low cost of finance are factors which provide the basis for this assumption.

Nevertheless, the EU market for household appliances is typically driven by replacement demand. Robust sales in 2017 likely absorbed most of the pent-up demand that existed in the EU market. To a significant extent the slowdown in demand in 2018 and 2019 should be seen as a correction of higher sales volumes in 2017.

Other factors such as residential building activity and property market trends are, in principle, supportive to demand for household appliances, albeit less so than in the preceding years which were characterised by a broad-based boom in housing construction across the EU.

Innovative features of electric domestic appliances may trigger the interest of consumers and lead to early replacement of existing kitchen and general household equipment. These are basically technologies that allows for increased levels of interactivity between consumer and appliance to supervise electricity consumption in real time via a smart phone, tablet, or as part of a home automation system. If a house is equipped with solar panels, smart appliances could make optimal use of locally produced energy and would offer the consumer benefits when using relatively energy-intensive appliances such as washing machines and tumble dryers. Intelligent features in the cooling and freezing segment include tracking of expiration dates, automatic adjustment of cooling levels to the types of food that are stored, and the creation of shopping lists. It is expected that in the European market demand for smart household appliances will gradually gain traction, but it may take some time to reach the mainstream usage phase.

Meanwhile, international competition will remain fierce in this market, especially in the lower and medium quality segments, rather than in the high-end market segment.

Production activity in the EU is forecast to fall by 0.1% in 2019 and to rise by 2.2% in 2020.

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Posted By : Rabi Wangkhem on Tue, 14 May 2019
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