“While the world is growing, Germany remains in stagnation. The M+E industry is also unable to escape the unfavorable conditions and remains in recession,” said Lars Kroemer, chief economist at Gesamtmetall, assessing the economic situation in Germany’s largest industrial sector, which employs almost 4 million people.
The ifo business climate for the M+E industry collapsed in August to its lowest level since June 2020. Both the situation and expectations were assessed more negatively. The order backlog is rated as negatively as it has not been since the peak of the Covid crisis. The production plans of the M+E companies continued to decline in the summer and also indicate a decline in production for the third quarter.
“The extremely high cost burdens at the location are putting a strain on competitiveness and thus on export plans in the M+E industry, even though the IMF is forecasting a robust global economy. At the same time, the investment crisis is depressing domestic demand. Even existing orders are not being called upon. This is increasingly threatening jobs in the M+E industry,” Kroemer continued.
In June, the number of M+E employees was already 0.3 percent lower than the previous year. This means that more than 10,000 jobs have been lost within a year. Seasonally adjusted, the fifth consecutive month-on-month decline was recorded. In August, only 8 percent of M+E companies wanted to increase their employment. In contrast, 26 percent were planning to cut staff – the highest level since the end of 2020. At the same time, more and more M+E companies are expecting short-time work in the coming months.
“The recession threatens to continue in the second half of the year. Miserable conditions and the continuing decline in capacity utilization are forcing more and more M+E companies to take personnel measures – despite simultaneous shortages of skilled workers. An economic turnaround is urgently needed to strengthen the location. Otherwise, the downward spiral of recession and structural crisis will continue,” Kroemer concluded.
