Germany machinery sector to see fourth year of decline in 2026, VDMA says

BERLIN, Sept 17 (Reuters) - Germany's machinery and equipment industry is expected to shrink for a fourth consecutive year in 2026, with production forecast to fall 2% in real terms, the VDMA said on Thursday, cutting its earlier forecast of stagnation.

The downgrade reflects weak output this year, with production down 4.1% in the first seven months from a year earlier, despite signs that demand was improving.

However, the sector group said 2027 should mark a turning point, forecasting real production growth of 3%.

"The improved order situation and slightly brighter expectations suggest production will grow again in 2027," VDMA chief economist Johannes Gernandt said.

Price-adjusted orders rose 5% in the first seven months of 2026, driven by a 14% increase from non-euro zone countries. Business expectations have also improved.

Still, domestic demand remains weak and the recent pickup has yet to spread across the broader machinery sector, limiting the near-term production outlook, the group said.

(Reporting by Tom Kaeckenhoff, Writing by Friederike Heine; Editing by Thomas Derpinghaus)