The recovery of the German machine tool industry is taking shape. In the second quarter of 2026, incoming orders were up 12% compared to the same period of the previous year. After a rise of 15% in the first quarter, the first six months have seen an overall growth of 14%. Domestic orders increased by 16% and orders from abroad by 13%.
Bernhard Geis, head of economics and statistics at
VDW (German Machine Tool Builders’ Association), said: “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. 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.”
The development continues to vary considerably according to customer industry. Aviation and Defense appear particularly dynamic. There is also plenty of demand from the electronics industry and medical technology. The situation remains more difficult in metal processing and mechanical
engineering, while the biggest challenges continue to be found in the automotive and supplier industry. Here, the share of total sales for the German machine tool industry dropped to 23% in 2025. The largest customer sector remains mechanical engineering with 27%. The aviation industry, on the other hand, has increased significantly: its share rose to reach 11% within a period of two years.
This recovery has not yet reached production. In the second quarter, calculations estimated a 6% drop on the previous year. In the first six months, production declined by a total of 7% to around 5.9 billion Euro. However, the improved order situation should make more of an impact over the remaining course of the year.
There are also signs of stabilisation when it comes to export activities. In the second quarter, exports were still 4% lower than the previous year. A far slower decline when compared to the first quarter. As the largest market, the US remains a key pillar of the industry. Deliveries to the US increased by 8% in the first six months. In contrast, exports to the second biggest market, namely China, fell by 24%. However, companies have recently reported signs of stabilisation and a slight revival of Chinese demand. In view of the intense price competition, the principle of “Local for Local” continues to be a key mantra for German manufacturers with their own on-site production facilities.
In Europe, German machine tool industry exports fell by a total of 6% in the first six months of the year. France saw positive developments with a plus of 25% and a return to its position as the third most important sales market. Positive developments were also seen in Poland and the Czech Republic. India stayed on course for continued growth and has since become the fourth largest market of the industry.
Domestic development remains strained, however, with domestic sales 10% below the figure for the previous year in the first six months. And yet there are positive signs coming from the increase in domestic orders. Economic indicators such as the ifo Business Climate Index and the Purchasing Managers’ Index are also currently documenting a better industry outlook. With a drop of 2%, imports held up better than domestic sales. Japanese and South Korean manufacturers, in particular, were able to increase their sales in Germany. Overall, domestic consumption fell by 6%, demonstrating that sluggish investment on the German market has not yet been resolved.
Capacity utilisation has recently stabilised at around 75%. At the same time, the process of structural adjustment in the industry continues. Around 60,000 people were employed by companies in June, representing a good 6% less than the year before. Production figures are now currently around a third lower than the peak phases of earlier years. Bernhard Geis sums it up: “Total order intake has been heading in the right direction for six months now. It is crucial that this leads to a sustainable recovery.”