Mechanical engineering companies in Germany continue to expect a decline in production in the current year, but are seeing the first positive signs in the important export business.

"The negative factors are still noticeable," said Karl Haeusgen, President of the German Engineering Federation (VDMA), in a speech at the Hannover Messe on Monday. In particular, the great uncertainty among customers is preventing more investment and therefore more orders for the mechanical and plant engineering industry. However, at least foreign orders appear to have bottomed out. For the global economy, meaningful early indicators signaled an end to the downturn in the international industrial cycle. The forecast that production in the sector in Germany will fall by four percent in 2024 remains unchanged.

With over one million employees and an annual turnover of more than 200 billion euros, mechanical engineering is considered the backbone of the German economy. The predominantly medium-sized industry, which also includes listed companies such as Thyssenkrupp and Siemens, sells around three quarters of its equipment abroad. Conflicts such as those in Ukraine and the Middle East, high interest rates and inflation are spoiling customers' investment mood.

Haeusgen appealed to the German government and the EU to improve conditions for business locations. "New investment projects are currently mainly taking place abroad, for example in the USA. If we do nothing to counteract this, it will lead to a sustained weakening of our economy."

(Report by Tom Käckenhoff; Edited by Scot W. Stevenson; If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets)).