June exports give needed boost to German mechanical engineering sector

Strong exports in June gave a boost to Germany's struggling mechanical engineering sector, limiting losses in the first half of the year, the VDMA industry association said on Friday.

Machines and equipment worth €99.3 billion ($116 billion) were exported between January and June. Exports fell 0.8% in nominal terms compared with the same period last year, while the price-adjusted decline stood at 2.5%.

"Geopolitical tensions, US tariff policy and the persistently weak China business weighed on machinery exports in the first half of the year," said Anke Uhlig, economic analyst at VDMA.

She said a largely stable second quarter and a strong 6.8% export rise in June had, however, softened the first-half decline.

US business stabilizes

Although US President Donald Trump's tariff policy and the strong euro acted as a drag on business in the United States, exports in the first half of the year still edged up 0.5% to just under €13 billion, thanks to a stabilization in the second quarter.

By contrast, exports to China fell by almost 14% in the first half of the year to just over €7 billion. Business with the rest of the European Union rose slightly by 1.3%, supported by key markets such as France and the Netherlands.

The sector has mixed expectations for the second half of the year. 

"The recent recovery in exports to the USA remains subject to the caveat of uncertain tariff policy," Uhlig said.

She said weak demand and growing competitive pressure were clouding the outlook in China, while Chinese suppliers were advancing on world markets. 

"To broaden export markets, the industry urgently needs further free trade agreements and a more efficient European single market," she said.