Machine Tool Industry not expecting an Upturn until 2026

In the second quarter of 2025, incoming orders in the German machine tool industry remained at the previous year's level. Domestic orders fell by 14%, while orders from abroad rose by 7%. From January to June 2025, incoming orders fell by 5%. Domestic demand fell by 22%, while foreign orders were up 4% on the previous year.

"The main impetus in the first half of the year came from Europe, while demand in Germany has not yet picked up," commented VDW Executive Director Dr. Heering on the figures. The continuing uncertainty caused by the US tariff policy and the many crises is making investors wait and see. The currently negotiated tariff rate of 15 percent, as long as it remains in place, increases costs and significantly impairs German exports to the largest market, the USA. "Although the US industry urgently needs our machines because there are no comparable offers in the country, small and medium-sized US companies in particular will not be able to pay the higher prices," says Heering.

In the medium term, however, the outlook in Germany is brightening. The approved spending on defense and infrastructure as well as the recently adopted investment package could noticeably stimulate the willingness to make new purchases. In any case, the ifo Business Climate Indicator signals an improved mood in the German manufacturing industry. The international Purchasing Managers' Index PMI also indicates that German industry is bottoming out. However, this is not yet the hoped-for turnaround. "The recovery of the machine tool industry has been postponed once again," predicts Heering. "We don't expect to be able to return to a stable growth path until 2026." Domestic demand in particular should provide a tailwind, while foreign business is likely to be weaker than previously expected. "The USA is hurting itself the most with its customs policy and is failing as an economic driver," says Heering.

In the first six months of this year, machine tool sales were down 9 percent. The German machine tool industry is one of the five largest branches of mechanical engineering. It supplies production technology for metalworking to all branches of industry. In 2024, the industry produced machines and services worth around 14.7 billion euros with an average of around 65,300 employees (companies with more than 50 employees).