German Machine Tool Industry Stabilizing Amidst Declining Orders

Downturn hits floor Decline in German machine tool orders bottoming out

2025-11-21 Source: VDW 2 min Reading Time

After months of declining orders, the German machine tool industry may finally be stabilizing. While domestic demand remains weak, new investments from defence, aviation and medical technology signal early signs of recovery.

Orders received by the German machine tool industry fell by 5 percent in the third quarter of 2025. Domestic orders were down by 15 percent, while orders from abroad decreased slightly by 1 percent. Orders also fell by 5 percent in the period from January to September 2025. Domestic demand declined by 20 percent, while foreign orders stabilized at 2 percent higher than in the previous year.

“We are currently seeing sideways movements in the incoming orders, leading us to assume that the decline has now bottomed out at a low level,” says Dr. Markus Heering, Executive Director of the VDW (German Machine Tool Builders' Association) in Frankfurt am Main, commenting on the result. The orders that are currently being placed, particularly those from abroad, are in the fields of automation, digitalization, service, retrofitting and sustainability. It is mainly customers from the defense, aviation and medical technology industries who are investing. The defense sector is expanding its capacities in response to the high levels of demand. This is benefitting not only the suppliers of electronics, metal and precision components but also the engineering sector. Nevertheless, it will be several months before these orders feed through into the production figures. Meanwhile, key customer sectors, including the automotive and supplier industries, remain weak.

In regional terms, the Europe market is currently holding up well, particularly Turkey, Italy, Spain and Eastern Europe — especially the Czech Republic, Poland and Hungary. By contrast, other important markets such as China, South Korea, the US and Mexico are showing signs of slowing down.

“The very slow pace of reform here in Germany combined with the ongoing uncertainty in the global economy caused by US tariffs are continuing to hold back domestic investment,” says Heering. Further factors which are weighing on demand include structural change in the automotive industry, ongoing competition with Asian manufacturers, and currency-related headwinds which have seen the euro appreciate against the US dollar and yen.

Sales of machine tools were down 7 percent in the first nine months of this year. If the announced investments in defense and infrastructure come to fruition, this will enable Europe — and Germany in particular — to develop into a positive driving force within the global economy in the coming year instead of holding it back.

(ID:50635325)

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Date: 08.12.2025

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