Large orders soften decline in German mechanical engineering

In the first half of 2019, mechanical engineering companies in Germany recorded a significant drop in their order books, the decline amounted to 9 per cent in real terms compared to the previous year and was the same for national and international orders.  "This decline can be attributed to the weaker global economy, the numerous mostly politically motivated uncertainties, and the far-reaching structural change in the automotive industry," explained VDMA economic expert Olaf Wortmann.

German Mechanical Engineering Sector Analysis

In June 2019, order intake in the German mechanical engineering sector fell short of the previous year's level by 5 percent in real terms.  While domestic orders fell by 16 per cent in June, orders from abroad were able to maintain their already high level of the previous year.  "The number of large orders from non-euro countries is surprising.  It was already high in June 2018 and has now risen again, resulting in an increase of 2 percent in orders from non-euro countries.  It is extremely rare that an already high level of large-scale orders from a previous year can be maintained, let alone expanded on," said Wortmann.  By contrast, in the euro zone a 9 percent drop in orders was measured in June.

In the three-month period from April to June 2019, the weakening mechanical engineering economy became evident, with orders down by 8 percent year-on-year.  Domestic orders fell by 12 per cent and foreign orders by 6 per cent.  Orders from the euro countries shrank by 7 percent, while orders from non-euro countries fell by 5 percent.

Fabian Wanke, analyst at ARC Europe comments: “The upheaval in the automotive industry, the upcoming BREXIT and the trade disputes between the USA and China and between the USA and Europe are hitting the German mechanical engineering industry hard.  In particular for the export-dependent German economy, a calming of the trade disputes would be important in order to avoid sliding into a recession.”