The machinery and plant engineering sector is entering the second half of the year with slightly more confidence. After a weak start to the year, sentiment improved slightly in the second quarter. While this is not yet enough to signal a genuine turnaround, the industry is sending the first cautiously positive signals.
Sentiment in the machinery manufacturing sector brightened somewhat in the second quarter, but the outlook has improved only marginally. The war in Iran is causing new tensions in supply chains. The war in Iran and its economic consequences weighed on the machinery and plant engineering sector in the second quarter of 2026.
Although sentiment has brightened somewhat compared to the start of the year, there is still no sign of a substantial recovery.
About 28 percent of companies rate their current situation as very good or good. In contrast, just under a quarter of firms describe the situation as bad or very bad.
As a result, the net balance is once again slightly positive, after having been slightly negative in the previous survey in March.
However, the outlook has improved only marginally: About 25 percent of companies expect their business situation to improve over the next six months, while 11 percent expect it to worsen. The majority continues to anticipate that the situation will remain largely unchanged.
Revenue expectations also do not yet show a clear turnaround. For the current year, they have fallen slightly despite a somewhat more positive assessment of the situation; on average, however, companies continue to anticipate moderate nominal revenue growth.
Expectations for 2027 are somewhat more positive, but remain widely varied across companies given the high level of uncertainty.
“Sentiment in the machinery and plant engineering sector has brightened somewhat. However, the war in Iran has increased uncertainty again and further cooled the global economy,” comments VDMA Chief Economist Dr. Johannes Gernandt on the results.
Positive Outlook for the U.S., Negative Assessment for Germany
Assessments of key sales markets continue to vary widely. Among the major markets, North America—and thus primarily the U.S.—continues to receive the most positive assessment. Just under 39 percent of companies report a good or very good business situation there.
The Chinese market, on the other hand, is viewed with ambivalence. There is a considerable proportion of both positive (24 percent) and negative (35 percent) assessments.
The German domestic market remains a particular weak point and ranks last among the major sales markets.
Just under 35 percent of companies rate the business situation in Germany as poor or very poor, while only just under 20 percent report a good or very good situation. As for expectations for the coming six months, the balance is slightly in favor of companies that anticipate an improvement.
However, the majority expects the overall mixed situation to persist for the time being. The EU, on the other hand, is proving to be a more stable sales market, even if it cannot yet be described as particularly dynamic.
Companies Are Noticing Impacts on Supply Chains
The closure of the Strait of Hormuz as a result of the war in Iran is now also affecting supply chains in the machinery and plant engineering sector. Particularly affected are intermediate products in the metals, plastics, and chemicals sectors, as well as electronic components.
Some companies report severe or noticeable supply bottlenecks. For metals as well as plastic and rubber products, the share of affected companies stands at around 10 percent in each case.
The constraints on electronic components are much more pronounced: here, just over one in five companies reports noticeable or severe shortages.
Employment Situation and Capacity Utilization Remain Tight
The staffing situation at companies remains difficult due to the economic downturn and demographic trends.
Furthermore, more companies plan to reduce rather than expand their core workforce, and fewer job openings are expected. Capacity utilization improved slightly in the second quarter but remains weak.
The share of companies with capacity utilization below 70 percent fell slightly to around 17 percent. About 32 percent of companies report capacity utilization between 80 and 90 percent.
“Customers are hesitant to invest because uncertainty remains high and costs, regulation, and international competitive pressure are reinforcing one another,” says Dr. Gernandt. “Small and medium-sized enterprises, in particular, now need reliable framework conditions, less bureaucracy, competitive costs, and a level playing field so that cautious planning can once again translate into concrete orders.”
The VDMA Economic Survey for Q2 2026 can be found here.
