The mechanical engineering sector also significantly lowers its economic forecast

The German mechanical engineering industry has significantly less to do this year than expected. Production adjusted for price changes will be around eight percent below the previous year's figure, the industry association VDMA currently estimates in Frankfurt.

Sales crisis in mechanical engineering likely to continue into 2025

This means that the previous forecast of minus four percent has been significantly reduced again. Companies last experienced an even greater slump in the Corona year of 2020. Due to the weak orders so far, a decline in production of two percent is also expected next year.

VDMA chief economist Ralph Wiechers sees the reasons for the low utilization of production facilities primarily on the demand side. The important markets of the USA and China are showing weaknesses for various reasons. In Europe and Germany, the future economic course is unclear. The industrial sector is pinning its hopes on falling inflation and an existing interest rate cut.

Industry hopes for central banks to cut key interest rates

“The first central banks have already started the interest rate cut cycle, others will follow. “There is also a legitimate chance that positive monetary policy impulses will be given to the economic trend at the end of the year and in the course of 2025,” says Wiechers. In addition, private consumption should increase in many countries following strong real wage increases. Risks include a possible trade war between the USA and China and an escalation of conflicts in the Middle East and Ukraine.

According to the association's expectations, the lower production could also lead to the first decline in sales since 2020. The VDMA expects sales of 240 billion euros for both the current and next year, after 256 billion euros in 2023. The number of employees could fall by around ten thousand to 1.02 million people in 2024.

Mechanical engineering is part of the metal and electrical industry sector, for which wage negotiations begin this week. IG Metall demanded seven percent more money.

The largest industry representatives in mechanical engineering include:

• Bosch
• Siemens
• ZF Friedrichshafen AG
• ThyssenKrupp
• KionGroup