German Machine Tools in the First Half of the Order Plummeted 35% Hit Hard

According to VDW, the German machine tool manufacturers' association, orders in the German machine tool industry decreased by 46% in the second quarter of 2020 compared with the same period last year, while domestic orders decreased by 36%. Foreign orders fell by 51%. In the first half of 2020, German machine tool orders fell by 35%. Domestic orders were down 28% from the previous year. Foreign orders fell by 39%.

German machine tool orders plummeted by 35% in the first half of the year, hitting hard!

"You can see from the second quarter's data how big the impact of the new crown outbreak is." Dr Wilfried Schafer, general manager of the German Machine Tool Manufacturers Association (VDW), said. Many downstream industries of machine tools, particularly in the aerospace and automotive industries, are experiencing strong sales declines, with the result that working hours are shortened, factories are temporarily closed and liquidity is tight. Investment activity around the world has stagnated almost during the embargo. Encouragingly, however, the number of orders now appears to have reached its lowest point, with a significant increase in June compared with the previous two months.

The more positive signs came from two early indicators: the PMI (Purchasing Managers' Index) and the Ifo Business Status Index. In July, the global purchasing managers' index (PMI) broke through the 50-point mark for the first time, meaning the economy is growing. This level of growth is surprising, and there has been widespread growth in China and the United States, as well as in the euro areas such as Germany, France and Italy. According to Ifo, expectations in the German investment goods sector have improved. Retail sales are recovering and industrial production and exports rose again in June. That could signal a expected recovery in the second half of the year, Schaefer said.

Despite this, experience has shown that the machine tool industry is a highly cyclical industry that will take longer to recover, the VDW Association said. As a result, the industry's expectations for the next six months remain low. This view was also confirmed by the development of sales, which fell 26 per cent year-on-year in the first half of the year.

Companies offering medical technology, electronics and mechanical engineering, driven by digitalization and 5G expansion, look a little better. "However, in all areas, the risk of a second wave of infection remains highly uncertain, so the timing of a stable international investment activity cannot be given," Mr Fisher said. These companies are now doing everything they can to weather the crisis, advance their businesses, and try to keep their operations going by reducing working hours. The number of employees in May was 3.7% lower than the previous year.