Autumn Economic Outlook confirms manufacturing slowdown

Despite some bright spots, Orgalim’s economists are forecasting a 1.2% contraction this year after adjusting for inflation, below most expectations for the economy as a whole. Furthermore, our estimates point to a continued slowdown in 2024, at least in the first half of the year.  

“At a time when Europe is counting on its industry to deliver net zero, the slowdown in high-tech manufacturing is concerning and should ring alarm bells for policymakers,” said Malte Lohan, Orgalim’s Director General. “The health of our manufacturing sectors is vital for the medium-term competitiveness of Europe’s economy, with major implications for jobs, investment, innovation and progress towards net zero.”  

Among the factors contributing to the slowdown, the report cites the lack of growth impetus from non-EU countries, the weak industrial cycle in China and the fact that the post-Covid catch-up surge has now run out. Rising interest rates and the uncertain global economic outlook are also having a negative impact on the willingness to invest. The latest survey data confirm the continued pessimism around European high-tech manufacturing competitiveness, in the face of concerns about the mounting regulatory burden and the persistent deteriorating trend in unit labour costs.   

On the positive side, while inflationary pressures remain, costs relating to energy and industrial metals have been easing and Orgalim’s members expect stable to slightly rising employment despite the declining demand, as the market for skilled labour remains extremely tight. 

Read the full report here: Economics & Statistics Report - Autumn 2023 | Orgalim