Germany’s mechanical engineering sector recorded a decline in new orders during the second quarter, as companies adopted a cautious stance over looming U.S. tariffs.
According to the German Mechanical Engineering Industry Association (VDMA), the industry saw a two per cent drop in price-adjusted orders between April and June, despite strong demand from eurozone countries. This was not enough to offset shrinking orders from Germany and non-eurozone markets, which fell by one per cent and nine per cent respectively.
VDMA’s chief economist, Johannes Gernandt, noted that eurozone orders surged by 19 per cent year-on-year in Q2, helping to sustain modest overall growth in the first half of the year. Real order values rose by one per cent in the six-month period.
However, the month of June alone saw a sharper setback, with orders from outside the eurozone plummeting by 13 per cent compared to the same month last year, contributing to a five per cent overall monthly decline.
Experts at VDMA attribute the downturn to ongoing uncertainty surrounding the U.S.-EU tariff dispute. Although a 15 per cent tariff on EU exports to the U.S. was agreed at the end of July, its full impact remains unclear.
“At least companies now have planning security, which has been bought at a high price—provided the deal holds,” Gernandt said.