Europe's farm machinery market is poised to return to growth in 2017, industry group Cema said, flagging a resurgence in optimism among the bloc's ag equipment sector to the highest in five years.
Brussels-based Cema acknowledged a soft start to 2017 for European ag equipment sales, with the tractor market shrinking by a further 1.3% in the January-to-March period, with declines in the Netherlands and, in particular, France offsetting rises in the likes of Germany, Spain and the UK.
"Given the size of the French market, it was mostly due to the sharp decrease in France," where shrinkage of 26% was reported, "that the total European tractor market remained in the negative in the quarter", the group said.
However, the European farm machinery market overall is expected nonetheless "to return to growth again" in 2017, said Cema, flagging improved industry optimism.
"Sales expectations for most European countries are cautiously positive."
Indeed, a monthly barometer of sector sentiment has risen to its highest since May 2012, Cema, flagging an "increasingly positive mood amongst manufacturers.
"The barometer clearly shows sharply increasing business expectations for the coming months.
"Whereas in October, a majority of companies expected a shrinking or stable market in the six months to come, a majority of 53% now expects their turnover to grow in the next six months," the group said.
A sub-index on the industry's future expectations hit its highest since 2011.
The optimism reflected in part forecasts for exports, with Cema flagging that "the business outlook is somewhat more positive for foreign markets".
However, improvements were expected in many European markets too, with shrinkage in Italy expected to decline to 2.2% this year, from 3.7% in 2016, and the UK expected to see a flat performance, recovering from 2% shrinkage last year.
"The tractor market is expected to grow again from a 15-year low in 2016."
The German market, Europe's second biggest, is seen showing a "small increase" this year, "bouncing back" after a 5% decline in 2016.
The biggest question mark lies over the French market which, having shrunk by some 8% last year, looks like extending that decline at least for the first half of 2017.
The difficulties of the French market were highlighted last month by equipment giants Agco, the maker of New Holland and Case equipment, and Massey Ferguson and Fendt group CNH Industrial, which said that the malaise reflected uncertainty in the run-up to presidential elections, and the boots to year-ago sales from tax concessions.
Martin Richenhagen, the Agco chief executive, said that in Europe, the group's "sales declined most significantly in France from high levels in the first quarter of 2016, which were, as you remember, stimulated by tax benefits.
"Growth in the United Kingdom and Germany offset most of the decline in the French market."
At CNH Industrial, chief executive Richard Tobin said that "we'd like to see the elections in France to conclude because that may give some boost to the weakest market in Europe right now, which is the France market.
"Really, the only market in Europe that's significantly negative is France."
Indeed, CNH ditched ideas of a 5% decline in European combine and tractor markets this year, seeing instead a flat performance.
"We're feeling a lot better about the European demand than we were when we gave out guidance for the full 2017," in January, Mr Tobin said.
"We see increased demand in Eastern Europe, including Ukraine. We see good demand in small tractors, particularly in the southern European states.
"Germany has actually returned to growth during the month of March. The UK, despite Brexit fears, has actually been performing quite robustly."
By Mike Verdin