German machinery orders drop further amid geopolitical tensions

Orders for Germany's mechanical engineering sector dropped significantly in February due to uncertainty over geopolitical tensions, according to figures released by a leading industry group on Wednesday.

Orders were down by 12% in real terms compared to the same month last year, the Association of German Mechanical and Plant Engineering (VDMA) said in a statement.

Domestic orders dropped by 16%, while international business slowed by 11%.

By comparison, orders from fellow eurozone countries rose by 6%, the VDMA said.

In January, the price-adjusted value of orders was 6% below the previous year's figure, according to the group.

VDMA chief economist Johannes Gernandt attributed the latest slump to the uncertainties arising from geopolitical conflicts.

"Geopolitical conflicts have been weighing on our business for some time now, and now the war in Iran has been added to the mix, causing further uncertainty," he said.

"All these conflicts are a heavy burden on the global investment climate, and their impact is clearly noticeable."

The February figures do not yet reflect the impact of the war in Iran, launched by Israel and the US on February 28.

The VDMA said the drop in orders was also reflected in its latest economic survey, with sentiment among mechanical and plant engineering businesses "clouded slightly again."

In the less volatile three-month period covering December to February, companies saw their orders drop by 8% in real terms, compared to the same period a year ago.

Domestic orders in the period decreased by 6%, while international orders dropped 8%.