German engineering industry doubt grows over recovery

Hope for a rapid economic recovery has given way to slightly increased scepticism among many German mechanical and plant engineering companies. This is the key message of the eighth survey by their industry association, VDMA, on the economic effects of the Covid-19 pandemic.

Only 18% of companies surveyed expect a return in 2021 to the sales levels of 2019, compared to over 30% in the previous survey in mid-June, Kallanish hears from VDMA. “Many companies are expecting a longer way out of the crisis and are adjusting their corporate strategy accordingly,” notes VDMA chief economist Ralph Wiechers.

Although the proportion of companies with serious order losses and cancellations has successively fallen from 45% to 28% since May, “…the continuing slump in orders continues to cause problems for many companies,” he says.

Almost two thirds of managers surveyed see a second Covid-19 wave as the greatest downside risk for the economic recovery. The great uncertainty is also having a negative impact on the willingness of companies to invest in their own facilities, and many will confine investments in 2021 to domestic plants, VDMA notes.

In August, its members posted a -14% year-on-year drop in real orders. This is the smallest decline on a monthly basis since the beginning of the coronavirus crisis. In June-August order intake fell by -22% compared with the previous year.