German Machinery Manufacturers to Cut Thousands of Jobs by 2025 - Germany's engineering sector sees first growth in years after brutal slump

Germany's mechanical engineering sector showed signs of recovery in late 2025 after a long downturn. Orders surged by 11.5% in December compared to November, marking the strongest monthly increase in years. Yet the industry still faces job cuts and ongoing economic challenges.

The sector has struggled for three straight years, with production falling annually since 2023. By the end of 2025, employment dropped by 2.2%, shedding around 22,000 jobs. The decline stems from weak demand, US trade tariffs, and fierce competition from China.

Despite the slump, December's order growth—part of a broader 7.8% rise across manufacturing—suggests a possible turnaround. The industry's trade group, VDMA, noted that while some firms plan to hire, more are preparing further layoffs in 2026.

Experts now expect output to rebound next year, following a slight uptick in the final months of 2025. Japan also saw a 7.0% increase in machinery orders in October, though US data for 2025 remains unavailable.

The December surge in orders offers cautious optimism for Germany's mechanical engineering industry. However, job losses and global competition continue to weigh on the sector. Recovery in 2026 will depend on sustained demand and market stability.