VDMA
Significant dip for mechanical engineering in November as well
The economic consequences of the war in Ukraine had a negative impact on the business of German mechanical engineering companies at the end of the year.
For the second month in a row, customers were reluctant to place orders with the export-oriented industry in November. "It is good that many mechanical engineering companies have a cushion of orders that they can carry into the new year," said Ralph Wiechers, Chief Economist of the industry association VDMA, on Wednesday (January 11).
After a double-digit drop in orders in October, orders in November were 14 percent lower in real terms than in the same month last year, according to the VDMA. Orders from abroad fell by 17 percent. In the eurozone, they slumped by 30 percent. Domestic orders were 7% lower than in November 2021, when more orders for large-scale plants, among other things, had ensured a strong result overall. "However, this does not completely eliminate the decline," said Wiechers.
The economist explained that the decline was not surprising given the economic and political environment. "Investors have very little incentive to invest in this environment." The VDMA assumes that production will grow by one percent in real terms in 2022 despite the slowdown.
The key German industry with more than one million employees is also expecting headwinds this year. Production is expected to fall by two percent. Significantly weaker growth in China, the war in Ukraine, inflation and interest rate hikes by central banks will weigh on the global economy and thus also on the capital goods industries for the foreseeable future. However, the expected decline in production is "a far cry from the setbacks of previous years and shows the robustness of our industry," said VDMA President Karl Haeusgen at the presentation of the forecast in mid-December.
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