German mechanical engineering companies increased their production at the beginning of the year.

According to preliminary figures, production increased by 3.2 percent in the first two months of 2023, the German Engineering Federation (VDMA) announced at the Hannover Messe on Monday. In 2022, manufacturers of machines "Made in Germany" achieved an increase of 0.5 percent. The association confirmed its forecast, according to which it expects a decline of two percent in the current year. "The current slight improvement in the economic environment will only be reflected in the industry's order intake and sales after a time lag," said VDMA President Karl Haeusgen.

In January and February, orders fell by a cumulative 17% compared to the previous year. "This decline in orders is a consequence of the global economic slowdown, which is unsettling investors," explained Haeusgen. However, companies still only recorded a small number of cancellations. The most recent order backlog of 11.6 months continues to support production. On a positive note, the bottlenecks in the supply chains have eased considerably. The predominantly medium-sized sector, which also includes listed companies such as Thyssenkrupp and Siemens, is a backbone of the German economy. At the end of last year, 1.018 million people were employed in these companies - an increase of 1.1 percent on the previous year. "Many companies would have liked to take on even more staff, but are being held back by the bottlenecks on the labor market," said Haeusgen. According to the latest survey, the labor shortage is the biggest challenge facing the industry.

(Report by Tom Käckenhoff, edited by Kerstin Dörr. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)