After ten months of the current year, the mechanical engineering sector recorded an increase in production of 3.7% according to VDMA calculations. In the same period, incoming orders were up 7% on the previous year. At the same time, the number of employees (in companies with more than 50 employees) in Germany rose by 34,000 to 1.067 million by September - an increase of 3.4%. "This shows that mechanical engineering companies are not afraid of the future and want to continue investing," explained Welcker.

However, companies are concerned about bottlenecks both in the supply chain and in terms of skilled workers. According to recent surveys, 27% of mechanical engineering companies in Germany are suffering from a shortage of labor, while production is being hampered by a shortage of materials in 28% of companies. "These bottlenecks could continue to limit growth this year," notes the VDMA President.

2019 with less momentum

For the coming year, VDMA economists only expect production growth of 2% in real terms in the mechanical engineering sector. The pace of the global economy is expected to slow down. This will also be felt in the mechanical engineering sector, which has an export ratio of almost 80%. On the positive side, orders on the books currently still have an average range of 8.6 months. However, the ongoing trade dispute between the USA and China, in which the EU could also be drawn into even more, the risk of a hard Brexit, the sanctions against Russia and Italy's debt crisis are only the most obvious hurdles to further growth.

On the other hand, the medium-sized industry is hoping for continued momentum from the domestic market: "Although investments have already picked up in this country, they are still below average. In addition, automation solutions offered by the mechanical engineering sector are becoming indispensable for many companies, especially in times of a shortage of skilled workers," says the VDMA President.

The export situation

Exports by mechanical engineering companies from Germany increased by a nominal 5.2% to 131.9 billion euros in the first nine months of 2018. China (up 11.4% to EUR 14.23 billion) and the USA (up 6.9% to EUR 14.16 billion) went head-to-head for the top spot in the export rankings, with the People's Republic just ahead. However, the increase in exports to China in this period was dampened by the prospects of a weakening Chinese domestic economy, which is also suffering from the punitive tariffs imposed by the US government. At the same time, labor and production costs in China continue to rise.

According to the VDMA, the economy in the United States is currently still benefiting from lower corporate taxes, although domestic investment is already weakening here too. "We therefore expect the EU to vigorously push ahead with negotiations on both a lean free trade agreement with the USA and an investment agreement with China," demanded Welcker.

Danger of a hard Brexit remains

According to Welcker, Brexit is still proving to be a burden on business that is difficult to assess. Although exports by mechanical engineering companies from Germany to the UK increased by 4.5% in the first nine months of 2018, the risk of a hard Brexit with all its difficult-to-assess consequences remains until the UK parliament approves the withdrawal agreement. "In view of the unclear situation, our companies must prepare for a hard Brexit at full speed. The chances of avoiding this scenario are getting smaller every day," warns the VDMA President.