December 23, 2013

Cautiously optimistic outlook for global rail industry

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THE latest SCI Rail Business Index regarding the current and expected business environment, based on a survey of top managers from around 100 representative companies from the global rail industry, reveals a cautiously optimistic outlook for 2014.

"Although 2013 was affected by uncertainties due to the economic and financial crisis, at the end of the year the mood in the rail industry is once again improving," says SCI Verkehr. "Not only is the current business environment evaluated by the managers interviewed better than in the previous quarter for the third time in a row, but the outlook for 2014 is cautiously positive.

"In the last quarter of 2013, the top managers interviewed evaluated their current business environment as better than in the previous quarter for the third time in a row," says SCI Verkehr. "This allows an upward trend to be detected in the industry for the first time.

Almost 40% of managers interviewed have evaluated the current business environment as good."

SCI Verkehr says this is the first time evaluations as good as in 2012 have been achieved. Nevertheless, they are still a lot lower than during the last peak in mid-2011, and it is not clear yet how far this upward trend will continue.

Almost 20% of businesses asked are positive about their current order backlog. In comparison with 2012, the proportion of companies with a small order backlog has reduced substantially, and in the last quarter of 2013, fewer than 25% of companies expect demand to fall.

Regarding the outlook for the first half of 2014, 25% of managers surveyed foresee a better business environment, while around 65% expect no major change. "Strikingly positive is the fact that since the end of 2012, the proportion of interviewees with negative expectations has halved," says SCI Verkehr.

SCI Verkehr points to a number of positive indicators. Germany - Europe's economic powerhouse - expects to increase infrastructure spending. Even the southern European countries of Portugal, Spain, Italy and Greece, which were hit very badly by the economic crisis, offer reasons to be hopeful. In Spain, the expansion of the high-speed rail network will continue to receive substantial funding with a large share of the €8.5bn budget being allocated to existing and new high-speed projects. China is also continuing to invest in high-speed rail with orders just placed for 258 trains.

Finally, the overall positive outlook has consequences for the labour market. Almost a third of businesses interviewed expect to take on more employees in 2014, while only a few businesses want to cut staff numbers.

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