Mechanical engineering exports developed well overall in the first half of 2023. However, momentum is declining noticeably, and a lack of orders is depressing export expectations.
In the second quarter of 2023, the export-heavy mechanical and plant engineering companies from Germany once again achieved a respectable export result, albeit with less momentum. According to preliminary results from the Federal Statistical Office, machine exports increased nominally by 8 percent in the second quarter compared to the previous year. In the first quarter of 2023, growth was still 15.3 percent. In the entire first half of the current year, machine exports recorded a nominal increase of 11.5 percent to 104 billion euros. Adjusted for prices, machine exports increased by just 3 percent in the first half of the year.
“The repeated increase in exports is due to inflation on the one hand and to the fact that the supply chains have eased significantly in many areas on the other. In this way, mechanical and plant engineering companies can further reduce their sometimes high order backlog. In view of double-digit order losses, however, we have to be prepared for a further decline in export volumes. According to the ifo business survey, the export expectations of machine builders for the next three months are currently at the lowest level since mid-2020," explains VDMA chief economist Dr. Ralph Wiechers.
Stronger export growth to the US than to China
Machine deliveries to the USA, the largest export market, made a positive impression. From January to June they continued to increase strongly compared to the previous year with a nominal 21.6 percent. The export value came to around 13.8 billion euros in the first half of the year.
“There are two main reasons for the strong demand from the US: First, the US economy is proving resilient in the face of rapid monetary tightening, with robust consumer demand and a strong labor market. Secondly, to achieve the goals of the Inflation Reduction Act and the CHIPS Act, machines and systems from Europe are also needed", says Dr. Wiechers.
After the corona measures were lifted, however, business in China will not really pick up at the end of 2022. In the first six months, German machine exports to China only increased by a nominal 4.4 percent to a total of 9.5 billion euros.
“Many companies have started the new year optimistically when it comes to business in China. So far, however, there has been no clear economic improvement. Industrial production in China hardly changed for the better in the second quarter compared to the previous quarter." wiechers
Double-digit increase in exports to the EU
With a nominal increase of 10.5 percent, the growth in German machine exports to the partner countries of the European Union failed. Machinery exports in the first six months corresponded to a value of 46.3 billion euros. Among the most important buyers of German machinery and equipment, France in particular recorded high nominal growth of 18.7 percent. Agricultural machinery in particular contributed to this strong growth. German machine exports to Italy increased by a nominal 8.9 percent, to the Netherlands by a nominal 8.5 percent and to Poland by a nominal 13 percent. In the first half of the year, 51.4 percent fewer machines and systems were delivered to Russia from Germany, after business had already slumped the previous year. Russia's share of total German machine exports is now only 0.8 percent, and the trend is falling.
