Germany machinery sector to see fourth year of decline

Germany's machinery and equipment sector is now expected to shrink for a fourth year running in 2026, according to Business Recorder, which cited the VDMA trade body. The group forecasts real production to fall 2 per cent this year, a downgrade from its earlier view of stagnation. Output dropped 4.1 per cent between January and July compared with the same period a year earlier, even though signs of improving demand have started to appear.

The association blamed weak output this year for the revision, yet it sees 2027 as a turning point, with real production expected to grow 3 per cent. Chief economist Johannes Gernandt cited a better order situation and brighter sentiment as reasons production should rise again next year. Orders adjusted for price rose 5 per cent between January and July 2026, with a 14 per cent gain from countries outside the euro zone.

Business expectations have also got better. However, domestic demand is still weak and the recent upturn has not yet spread across the wider machinery industry. The group said this keeps the near-term production outlook constrained.