Machines and Engineering Industry Trends June 2024

Market Monitor

  • Canada,
  • Tyskland,
  • Kina,
  • Japan,
  • USA,
  • Italien
  • Maskiner

28 Jun 2024

Contractions continue in Europe and the US, but a 2025 rebound is on the cards

Global engineering: Only modest production growth in 2024, sustained by the Asia Pacific region

  • We expect global mechanical engineering output to increase by 0.5% in 2024. This modest expansion is mainly due to growth in Asia Pacific, while activity in North America and Europe is subdued.
  • However, there are signs that activity is bottoming out in Europe and the US. We expect global mechanical engineering production to rebound by 5.1% in 2025.

US mechanical engineering: Looser monetary policy should help to trigger a recovery in 2025

  • After a 2% contraction in 2023, we expect US mechanical engineering output to shrink again in 2024, by 0.7%. Tighter lending conditions have created a spillover-effect of reduced business formation.
  • We expect US mechanical engineering output to rebound 3.7% in 2025, as macroeconomic factors become more favourable. Together with public infrastructure projects, expected monetary easing in H2 of 2024 should help to increase investment in machinery.
  • In the mid to long-term, demand for automation, digitalisation, and sustainable production solutions in manufacturing should support machinery demand.

China: robust sector growth, but issues in some machinery segments

  • We expect Chinese mechanical engineering output to increase by 4.1% in 2024 and by 6.2% in 2025. Growth is supported by fiscal expansion for the manufacturing sector to grow production capacity.
  • However, the property sector is still plagued by weak buyer demand for new homes and worsening financing difficulties affecting developers. As a result, production of construction machinery is forecast to contract by more than 19% this year.

Japan: Downturn triggered by woes in the automotive industry

  • We expect mechanical engineering output to decrease by 4.4% in 2024. The main reason is a 16% output contraction in the automotive sector in Q1 of 2024.
  • Domestic construction activity, which accounts for 13% of engineering demand, is slowing down. This shoild result in a 5.7% decrease in construction-related machinery production in 2024.

Eurozone: additional ECB interest rate cuts should drive a recovery in 2025

  • We expect mechanical engineering output in the Eurozone to contract by 2.9% this year, as higher interest rates have weighed on machinery demand from key buyer industries.
  • In 2025 we expect a rebound of about 3% in mechanical engineering production, as interest rates cuts by the ECB in H2 of 2024 should support additional machinery investment.
  • German machinery production is forecast to contract by more than 4% this year. The industry continues to struggle across all subsectors, and we expect an insolvency increase in the low double-digit percentage range in 2024.
  • After a mild contraction in 2024, Italian mechanical engineering output is forecast to grow by about 3% next year. Lower interest rates should help to shore up private business investments.



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