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Germany Order Books Decline Setting Gloomy Economic Mood

The weakness of the global economy is leaving its mark on the mechanical and plant engineering sector in Germany. In June, incoming orders fell by 9 percent in real terms compared to the same month last year. Domestic orders were down 11 per cent, while customers from abroad ordered 8 per cent less (euro countries: minus 18 per cent, non-euro countries: minus 4 per cent). “After the mood indicators have deteriorated considerably in the past months, the minus in June is hardly surprising,” says VDMA chief economist Dr Ralph Wiechers. The disruptions in the global supply chains continue to weigh on business, as do order cancellations as a result of the war in Ukraine.

“For the first half of the year, however, the order books show a small overall increase of 2 per cent, which was mainly driven by foreign orders. Many customers still want to invest in new machines and plants, even if restraint is increasing. Nominal turnover in the industry therefore grew by 7 per cent in the first half of the year,” Wiechers explains.

For the second quarter of 2022, companies recorded a decline in orders of 2 percent in real terms compared to the previous year. Domestic orders fell by 8 per cent from April to June inclusive, while orders from abroad increased by 1 per cent. Euro countries increased their orders by 3 per cent in this period, while orders from non-euro countries stagnated.

42 Hour Week Proposal Could Alleviate Skilled Worker Shortage

Commenting on data published recently by the German Federal Employment Agency, VDMA Executive Director Thilo Brodtmann says:

“The situation on the labor market continues to be determined by a high demand for skilled workers. According to the latest figures from the Ifo Institute, 43 percent of companies in the mechanical engineering sector complain that production is being hampered by the shortage of skilled workers. This figure has never been so high since the survey began in 1991. The proposal to introduce a 42-hour week is therefore more than worth considering. Increasing the weekly working hours could not only help alleviate the shortage of skilled workers. It could also help social security funds reduce their growing financial problems due to demographic trends.”

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