Germany’s mechanical engineering industry ended 2025 with order intake at the same level as the previous year, resulting in zero real growth overall, according to the German Engineering Federation (VDMA). The outcome was mainly supported by a seven percent increase in orders from euro zone partner countries, while domestic orders declined by one percent and orders from non-euro zone countries fell by two percent for the full year.
December decline driven by weaker foreign demand
In December, order intake dropped by five percent year on year. The decline was largely driven by weaker foreign demand, as orders from non-euro zone countries fell by 11 percent, partly due to strong large-order activity in the same month of the previous year. Orders from euro zone countries decreased by three percent, bringing the overall decline in foreign orders to nine percent. Domestic orders, however, rose by seven percent compared to December 2024.
Q4 stabilization points to modest 2026 growth
Despite the weak monthly result, the fourth quarter of 2025 showed signs of stabilization. Total order intake in the October-December period increased by three percent in real terms compared to the same quarter of the previous year. Domestic orders remained stable, while foreign orders grew by four percent overall, with a two percent decline in euro zone orders and a six percent increase in non-euro zone orders.
According to VDMA chief economist Dr. Johannes Gernandt, the sector is showing signs of reaching a cyclical bottom. With order levels stabilizing and improving in the final quarter, the industry is forecasting a slight real production increase of around one percent in 2026, though structural reforms will be needed to support stronger long-term growth.