Decline in orders in German mechanical engineering: Concern about weak domestic demand

German mechanical and plant manufacturers are concerned about the persistently weak demand for their domestic products. There is great concern that domestic orders in particular will continue to shrink from month to month, explains the chief economist of the VDMA industry association, Johannes Gernandt. “This shows how troubled Germany is as a location and how urgently it needs radical reforms.”

In August, the export-oriented industry suffered a setback: the value of orders fell by 5 percent compared to the same period last year, also due to a lack of large orders. Orders from abroad weakened more than domestic orders, falling by 6 percent.

Positive in the long term

In the less volatile three-month period from June to August, however, orders from abroad grew by 11 percent, while a decline of 1 percent was recorded from within Germany. The bottom line is that orders increased by 7 percent compared to the weak same period last year. For the first eight months of this year, the association registered an increase of 4 percent.

The plants are still underutilized: just two weeks ago, the VDMA lowered its production forecast for the current year to a decline of 2 percent. After four years of contraction, growth is not expected to return until 2027.