Economic Update - Special Report

Introduction

To be able to provide our Advisory Service clients with holistic coverage of the impacts of the COVID-19 pandemic on various markets, ARC Advisory Group has decided to publish our latest Automation Index and Machinery Index as a consolidated Special Report in PowerPoint format.  This concise report focuses on the quantitative rather than qualitative aspects. ​

We have adopted our CapEx calculations to line up with the machinery and automation indices, but this did not result in significant changes to the overall dynamics.

COVID-19 Pandemic Status: Coronavirus: The Numbers

• Origin:  China
• Status quo (Sept 2020):
  • Global – little spread in Africa
  • Spread depends largely on governmental measures
  • No proven vaccines or medications available
  • US, Brazil, and India have emerged as particular hotspots
  • Second wave in selected European countries due to travelling and less strict measurements – more younger people affected

• Chart shows number of vaccination trials
• No vaccine available so far, testing in progress
• Vaccine expected to reach market in mid 2021
  • Source:  Zeit.de

• Chart shows number of daily new infections, indexed to be 100 on the day with the highest number
• Strategies towards virus:
  • Strict lockdown (Europe, Taiwan, India, Vietnam…)
  • Testing (S. Korea, Singapore)
  • Contact tracing (Japan)
  • Immunity (Netherlands, Sweden)
  • Variable to none (Brazil, UK, US, some emerging economies)

• https://covidtracker.bsg.ox.ac.uk/
• Further Development:
  • Medical treatment
  • Gov. measures

Automation Markets

Automation Index: Raw vs. Seasonally Adjusted Data

• The direction of the index shows a downward trend for both raw and seasonally adjusted data
• Both indices show a difference of over 2 percent in Q2 2020 growth rates. The decline is due to the negative impact of COVID-19 pandemic across the globe
• Automation index saw a downturn since mid 2019.  COVID-19 came in early 2020, resulting in further negative growth rates in the first two quarters of 2020

Americas

• In the Americas, the raw data shows that quarterly YoY development has been negative for a long time
• The impacts of COVID-19, trade tensions and the recent global lockdowns, badly affected both the oil & gas, and aerospace & defense industries
• Disruptions in supply chains further impacted electronics, semiconductors and mining segments

Europe

• YoY growth continues to decline further in Q2 2020
• European automotive and machinery companies saw strong declines. Food & beverage, pharmaceutical and chemical seem to be stable
• Automotive industry has been experiencing downturn in growth rates since mid-2019 due to transition to electric vehicles and the recent COVID-19 pandemic further impacted the industry hard

Asia

• Markets further declined in Q2 2020 due to downturn of local automotive, semiconductor, and electronics markets due to COVID-19 pandemic and related supply chain disruptions
• Without COVID-19, electronics & semiconductor would likely have bounced back in Q2 2020
• China’s economy has seen a speedy recovery from COVID-19 pandemic compared with other nations globally and the market seems to be almost back to normal under increasing pressure to keep up with past production growth
• Growth impulses also came from South East Asia

Machinery Markets

Machinery Index:  Preface 

• ARC typically seasonably adjusts the data in our indices to more accurately show the business cycle, but we did not do so in our last Machinery Index (Q1 2020)
• Since the seasonably adjusted data now shows a dip in the market, we have returned to our normal practice of seasonably adjusting the raw data for this Q2 2020 Machinery Index
• Raw data shows a more significant downturn in Q2 2020 than does seasonably adjusted data

Table of Contents

• COVID-19 Pandemic Update
• Automation Index
• Machinery Index
• End User Index
• Summary

ARC Advisory Group clients can view the complete report at ARC Client Portal

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