While the situation in the second-largest employer in Germany, the auto industry, is dramatic, the situation in the first largest employer, mechanical engineering (machinery/equipment) is also pretty negative. According to the VDMA sector association, 22,000 jobs were lost in 2025 (2.4%). For 2026, the growth forecast is flat and VDMA expects the job cuts to continue throughout the year.
Orders in Q1 and Q2 stagnated domestically, but grew internationally, with a +27% in March and a +21% in June. The correlation with two large orders to the German defense industry suggests a rearmament-driven boost: Rheinmetall’s order backlog hit 73 billion as of March 31, 2026, up 31% year-on-year, with Q1 revenue up 8% to ~€1.94bn—so defense demand was clearly accelerating industry-wide right when VDMA’s March number spiked.
