The sentiment in the mechanical engineering sector has deteriorated, with a pessimistic outlook for the entire year. According to the VDMA economic survey, investments will not increase until 2025. Approximately 40 percent of companies expect a nominal decline in sales this year, while another 23 percent anticipate stagnant sales.
About a third (31 percent) of companies in the mechanical and plant engineering sector rate their current situation as bad or very bad. In contrast, 29 percent assess their situation as good or very good. These are the results of the latest VDMA economic survey, in which 932 member companies participated in June.
"This means that the overall picture has tended to shift towards the negative recently. In the second quarter, more companies were pessimistic than optimistic. In the spring, the majority of companies, albeit narrowly, were still optimistic," says VDMA Chief Economist Dr. Ralph Wiechers.
Outlook for 2024 Remains Pessimistic
Looking ahead to 2024, companies remain somewhat pessimistic. About 40 percent expect a nominal decline in sales this year, while another 23 percent anticipate stagnant sales. However, respondents are more optimistic about the following year. More than half consider a nominal increase in sales in 2025 to be realistic.
"Many companies had pinned their hopes on a positive second half of 2024. However, based on order intake, these hopes have not materialized for many. Companies have therefore had to revise their assessments downwards," explains Dr. Wiechers. Furthermore, nearly a third (29 percent) of companies view their order situation over the next six months as a major or very major risk.
Sales opportunities are assessed unevenly. The outlook remains positive in the USA, where 41 percent of companies rate their current sales opportunities as good or very good. About one-third of companies expect an improvement in the next six months. In contrast, only about one in five companies rate the current sales opportunities in China and Germany as positive.
Reasons to Invest Abound
Due to the persistently challenging conditions, companies show a clear reluctance to invest. Thirty-six percent of respondents expect their nominal investments to stagnate this year, while another 22 percent even anticipate a decline. Next year, however, investment willingness could rise again, as the results suggest. More than half of the companies expect investment growth.
"There are plenty of reasons to invest given the profound transformation in mechanical engineering and its customer industries. But for an increase in investments, good investment conditions are needed, such as planning security and reliable economic and political conditions. This insight has also reached politics. Now it is finally time to seriously improve the conditions for investing and innovative companies," explains the VDMA Chief Economist.
