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Germany Reports Continued Engineering Sector Concerns

The Mechanical Engineering Industry in Germany is gradually recovering from the consequences of the corona crisis. After the seasonal setback in August, order intake returned to a positive picture in September 2020.

“Although the previous year’s level was still 10 percent lower in real terms. However, domestic orders recorded growth for the first time since January of this year,” said VDMA Chief Economist Dr. Ralph Wiechers. However, the 4 percent increase in domestic orders is also related to a weak comparative month last year. Foreign orders were in the opposite direction; they fell by 16 percent year-on-year due to a strong basis effect. “The order situation has brightened recently, but setbacks cannot be ruled out in view of increasing uncertainty among investors due to the rising number of infections,” explained the VDMA chief economist.

In the first nine months of the year (January to September 2020), the order books of the Mechanical Engineering Industry fell by 15 percent in real terms. This reflects both the good start to the year and the subsequent severe corona distortions. In the first quarter, the medium-sized mechanical engineering industry had closed with a small drop in orders of 2 percent, followed by a minus of 30 percent in the second quarter.

In the three-month period from July to September 2020, new orders fell by 14 percent in real terms compared with the previous year. Domestic orders were down 10 percent, while export orders were 16 percent below the previous year’s level. Orders from the euro countries shrank by 16 percent, while orders from non-euro countries were down 17 percent.

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