German engineering orders saw an unexpected rise in February, driven by strong domestic demand despite challenging market conditions, according to the VDMA association. Orders increased by 8% compared to the previous year, with domestic orders surging by 11% and foreign orders rising by 7%. The eurozone saw a 4% increase, while non-euro countries recorded a 9% boost. This growth comes as a positive surprise for the sector, which has been struggling with global economic uncertainty and cautious investment behavior.
VDMA Chief Economist Dr. Ralph Wiechers attributed the growth partly to large-scale plant projects and partly to component business for global production. He noted that stock depletion led to reorders, though investment in new machinery remains scarce. While the increase in orders is encouraging, the overall industry outlook remains uncertain, with ongoing concerns about geopolitical risks, supply chain disruptions, and inflationary pressures affecting long-term investments.
Looking at the three-month period from December 2024 to February 2025, overall orders rose by 4%. Domestic orders declined by 5%, while foreign orders increased by 8%. Eurozone orders grew by 6%, and non-eurozone orders rose by 8%. These figures indicate that while domestic demand remains volatile, international markets continue to play a crucial role in sustaining growth. Industry experts suggest that a sustained recovery will depend on further economic stabilization and potential policy support measures to encourage long-term capital expenditures in the sector.