Sluggish pace of new job creation within the mechanical engineering industry
The German machinery industry is experiencing a slowdown, with job cuts predicted to continue in the coming months, albeit at a slower pace. According to the VDMA's business climate survey for the second quarter of 2025, the industry is not expected to see an increase in employment.
The latest figures show that as of June 30, 2025, approximately 1.01 million people were employed in Germany's machinery industry. This represents a decrease of two percent compared to the previous year, making it the lowest level since the end of 2021.
VDMA chief economist, Johannes Gernandt, has predicted that job cuts will continue in the coming months, but at a slower pace. He also stated that the slight easing in the industry's employment situation is a development of an encouraging sign, but it's not enough to speak of a sustainable recovery.
One positive sign comes from Metso, a major player in the machinery sector. The company has reported calling back temporarily laid-off workers in mid-2025, indicating early recovery steps, with increased manufacturing expected to translate into higher sales towards the end of Q3 and beyond.
However, the export-oriented sector is under pressure due to trade disputes and global uncertainty, causing caution in investments. This has led to a decline in new orders in the sector after a strong start to the year.
The trend of job cuts in Germany's machinery industry during Q3 and Q4 of 2025 shows signs of temporary layoffs easing and a gradual recovery in production activity. The expected recovery timeline, as per Metso’s statements, implies that by late 2025 (Q4 and beyond), the machinery industry in Germany should see improving demand and utilization, aiding gradual stabilization and job recovery.
In related sectors such as automotive and steel, significant job reductions are ongoing, highlighting ongoing restructuring pressures. For example, Volkswagen announced 35,000 job cuts, indicating a deeper recession in the industrial sector.
Despite the challenges, many companies in the German machinery and plant engineering industry are making efforts to retain skilled workers due to their scarcity. The proportion of companies aiming to expand their core workforce increased from around 17 to 20 percent compared to the first quarter of the current year.
In summary, job cuts in Germany's machinery industry occurred earlier, with temporary layoffs in early 2025. By Q3 2025, companies like Metso are recalling workers, signaling the beginning of recovery. Stabilization and improved sales are expected through Q3 and Q4 2025. However, full recovery timeline likely to extend into Q4 2025 and possibly beyond, depending on market demand and economic conditions. This employment figure is for companies with more than 50 employees.
Sources: 1. VDMA's business climate survey for the second quarter of 2025 2. Metso's statements on calling back workers 3. Broader industrial job cuts in related sectors 4. Industrial sector's deeper recession
The slowdown in the German machinery industry, as noted by the VDMA's business climate survey, is resulting in continued job cuts, although at a slower pace. In an encouraging sign, Metso, a key player in the machinery sector, has reported recalling temporarily laid-off workers, suggesting a potential recovery in finance and business activities within the industry.
