The German machine tool industry reported a significant decline in orders for the first quarter of 2024, experiencing a 24% decrease compared to the same period last year. Orders from domestic markets fell by 2%, while international orders plummeted by a substantial 32%.
“The sector is currently experiencing a major shortfall in orders compared to the previous year. This is due in part to a base effect, as there were still significant levels of orders on hand at the beginning of 2023,” said Dr. Markus Heering, Executive Director of the VDW (German Machine Tool Builders’ Association), Frankfurt am Main, commenting on the result.
Despite the downturn, early signs of stabilization are emerging. Dr. Heering highlighted that the next few months will be critical. “Our members are telling us that there is clear demand from customers in Germany, too, but that many investment decisions are currently being put on hold due to the high level of uncertainty,” Heering added.
There are optimistic indicators suggesting a potential recovery in the latter half of the year. Factors such as lower inflation, reduced energy prices, anticipated interest rate hikes, the conclusion of destocking, improved economic indicators, and increased real incomes driving consumption may contribute to a resurgence in investment.
This positive outlook is bolstered by the Global Purchasing Managers’ Index, which returned to low-level growth at the start of the year.
Looking ahead to 2025, Oxford Economics, the VDW’s forecasting partner, predicts a robust 8.3% increase in global machine tool consumption. The recovery is expected to be widespread, with significant contributions from India, the ASEAN region, the US, Mexico, and Canada. Many European countries are also projected to experience a clear upward trend.
“Rising international consumption could well feed through to an increase in orders in Germany,” said Heering confidently. “What is crucial now in this country is for the inquiries to translate into actual orders,” he concluded, emphasizing the government’s role in fostering an environment where the industry can operate with greater confidence.