German mechanical engineering orders dip as eurozone demand slumps 21%

Orders in Germany's mechanical engineering sector fell 1% in real terms in May compared with the same month a year earlier, weighed down by weak demand from eurozone partner countries, the Machinery and Equipment Manufacturers Association (VDMA) said on Thursday. 

Domestic orders fell 3%, while orders from abroad rose 1%, the Frankfurt-based association said.

Demand from eurozone partner countries was particularly weak, with orders from that region falling 21% year-on-year. Orders from non-eurozone countries, by contrast, rose 11%.

Industry in 'wait-and-see mode'

VDMA chief economist Johannes Gernandt cited customer concerns about global crises - and the resulting threat of supply bottlenecks for raw materials - as the reason for the reluctance to order. "As a result, the sector remains without new momentum," he said.

"The German government must not delay for a single day in implementing reforms that provide tangible relief for businesses; our industrial base urgently needs a significant upgrade," Gernandt said. 

In the less volatile three-month period from March to May, orders rose both domestically - up 3% - and from abroad, up 13%. The association said March had seen exceptionally strong large-scale orders.