DE Market | Machine Tool Industry in Q1 2026: Out of the Trough, Facing New Uncertainties

1st Quarter 2026 Low point overcome, but new uncertainties loom

The German machine tool industry has made a good start to 2026. After three years of declining demand, order intake has bottomed out and risen slightly again. Production, exports and employment, however, are still showing a significant decline. Furthermore, geopolitical risks remain high. The war in Iran is weighing on the economy with high energy prices and increased costs for raw materials, components and logistics.These uncertainties are once again fuelling reluctance to invest. Order intake rose by 15 per cent in the first quarter of 2026. Domestic and foreign markets contributed almost equally to this, with increases of 18 and 14 per cent respectively.

However, this figure needs to be put into perspective.

The starting point is weak, particularly in the domestic market. Furthermore, one-off orders and project business play a significant role. Consequently, growth of this magnitude is not widespread. Service and retrofit continue to underpin demand. In terms of sectors, business is going well, particularly in aviation, increasingly in the defence sector, as well as in medical technology and electronics. Metalworking and mechanical engineering, on the other hand, are struggling, and the automotive and supplier industry remains the major cause for concern. Production fell by 11 per cent to €2.8 billion in the first quarter.

Domestic sales, down by 13 per cent, performed weaker than exports, which fell by one-tenth. Among the sales regions, America proved to be a mainstay and saw only a slight decline. The USA, as the most important sales market, even managed to grow by 8 per cent. Exports to Europe fell by 11 per cent. Italy and the Netherlands were particularly weak. With a decline of 18 per cent, Asia recorded the heaviest losses. The main cause is the 32 per cent slump in exports to China. Due to fierce price competition, the ‘local for local’ principle is becoming increasingly important for German manufacturers with their own local sites. India, by contrast, is on a steady upward trend and has currently even positioned itself as the third-largest buyer. Imports, falling by 8 per cent, also reflected the weakness in the German market.

However, they fared slightly better than domestic sales. Japanese manufacturers in particular were even able to increase their sales in Germany. Overall, domestic consumption fell by 10 per cent, confirming the lack of investment in Germany. Capacity utilisation within companies continued to decline, most recently reaching 73 per cent. The necessary capacity adjustments are now clearly evident in the trend in employment figures. In March, the sector employed 60,600 people, just under 9 per cent fewer than a year earlier.

Stastical Sources： Federal Statistical Office, Ifo-Institute, VDMA, VDW

*This article is reprinted from VDW (German Machine Tool Builders' Association), 

Source: https://vdw.de/wp-content/uploads/2026/06/stat_wiza-lang-englisch_2026-Q1_2026-06-02.pdf