The German machine tool industry continued its recovery in the second quarter of 2026, with incoming orders rising 12% compared with the same period last year, according to the German Machine Tool Builders’ Association (VDW). The increase follows a 15% rise in orders during the first quarter, taking the overall growth in incoming orders during the first six months of the year to 14%.
Domestic orders increased by 16% in the second quarter, while orders from international markets rose by 13%. The consecutive double-digit increases point to an improving order environment, although the VDW cautioned that a broad-based recovery in demand has yet to be established.
“Two quarters in a row with a double-digit order increase is an encouraging sign. The slump is behind us and we’re now on course for better times,” said Bernhard Geis, Head of Economics and Statistics at VDW. “However, it’s too early to give the all-clear. The baseline was low and project business is still making a considerable contribution to growth. There are only limited grounds for talk of a widespread recovery of demand.”
Demand continues to vary significantly across customer industries. Aviation and defence are showing particularly strong momentum, while electronics and medical technology are also generating healthy demand. Metal processing and mechanical engineering continue to face challenges, with the automotive and automotive supplier industries remaining under the greatest pressure.
Mechanical engineering accounted for 27% of German machine tool industry sales in 2025, making it the largest customer sector. The share of automotive and supplier business fell to 23%, while aviation gained five percentage points over two years to reach 11%.
The improvement in orders has not yet translated into higher production. Production declined by an estimated 6% year-on-year in the second quarter, while output during the first six months fell 7% to approximately €5.9 billion. Capacity utilisation, however, has stabilised at around 75%.
Export activity is also showing signs of stabilisation. Exports fell 4% in the second quarter, a considerably slower decline than in the first quarter. Deliveries to the US, the industry’s largest market, increased 8% during the first half, while exports to China declined 24%. Manufacturers are reporting initial signs of stabilisation in Chinese demand, although intense price competition continues to reinforce the “Local for Local” strategy.
Exports to Europe declined 6% during the first six months. France recorded 25% growth and regained its position as the industry’s third-largest market, while Poland and the Czech Republic also recorded positive developments. India continued to grow and has become the fourth-largest market for the German machine tool industry.
Domestic sales remained 10% below the previous year’s level during the first half, while imports declined by 2%. Overall domestic consumption fell 6%, reflecting continued weakness in investment. The industry employed around 60,000 people in June, down more than 6% year-on-year. “Total order intake has been heading in the right direction for six months now. It is crucial that this leads to a sustainable recovery,” Mr Geis said.
