Advanced economies
In the advanced economies, industrial production decreased 0.6 percent in 2024 year on year and was 0.1 percent lower than in the pre-Covid year 2019. Industrial production was down without exception across all traditional industrialised countries, including the United States, Japan, the United Kingdom and the euro area. The advanced Asian countries excluding Japan recorded the highest growth at 5.8 percent, compensating for the drop in production the previous year. Output here was 14.7 percentage points higher than in 2019. In the group of other advanced economies, production only rose by a slim 0.7 percent but was still 8.3 percent higher than before the outbreak of the pandemic.
At the start of the first quarter 2025, industrial production among advanced economies nudged down 0.1 percent compared to the previous quarter. The primary downward factor was the weak performance by Asia and the other advanced countries. Industrial production pointed up in the United States, the United Kingdom and in the euro area at the start of the year. The purchasing managers’ index for manufacturing in the advanced economies rose in each of the first two months of the year. With 50 index points at last count in February, the index reached the threshold to expansion for the first time since May 2024. After two years of recession, industrial activity among advanced economies seems to have bottomed out. In view of the small positive carryover from the previous year, we expect industrial production to increase 0.5 percent this year.
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis, own calculations
Among emerging countries, industrial activity accelerated over the course of the year. After starting off the year with below-average growth, momentum increased and brought production among emerging countries overall in 2024 to 3.9 percent higher than in 2023.
Among the individual groups of countries, industrial value added rose the strongest in China with an increase of 5.6 percent. Industrial activity also rose more than usual in Central and Eastern Europe, expanding 4.6 percent in 2024, after already notching up four percent growth the previous year. In the other Asian emerging countries, industrial production rose on a similar scale to the previous year, increasing 2.8 percent. Latin America increased industrial production by one percent, its fourth consecutive year of growth. Industrial activity only declined in the region of Africa and the Middle East where it fell for the second consecutive year in 2024, but with a drop of 0.6 percent it was less pronounced than in 2023.
At the start of the first quarter 2025, industrial production in emerging countries increased by 0.8 percent quarter on quarter. Growth was driven by rising activity in China and the other Asian emerging countries. Production in Central and Eastern Europe and in Latin America dropped on a similar scale. The purchasing managers’ index for manufacturing in emerging countries has remained above the expansion threshold of 50 points constantly for the last five months. In February 2025, the index reached its highest level in three months at 51.2 points. In view of the global economic upturn, which benefit emerging countries significantly more than advanced economies, and the positive carryover of close to two percent, we expect industrial production here to increase this year by around three percent.
Purchasing Managers Index seasonally adjusted (left axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis
United States
US industry (industrial production excluding construction) started out 2024 with a 0.5 percent drop in production in the first quarter. In the second quarter, activity stagnated at the same level as the previous year. In the second half of the year, industrial activity continued to decline but was still 0.5 percent higher than in late 2019. In the year overall, production was down by a lean 0.3 percent. Manufacturing output dropped slightly more, decreasing 0.5 percent, but was still not lower than in 2019.
Among the individual industries of the manufacturing sector, the producers of computers and data processing equipment recorded a hefty production increase of 4.1 percent, which was only outperformed by the pharmaceutical industry, which rose 4.3 percent. The electro industry compensated for its drop in production the previous year by raising output by 0.7 percent in 2024. Basic chemicals stagnated, rising a miniscule 0.1 percent. Vehicle production expanded output in the first half of the year before turning down in the second half, resulting in a 1.7 percent drop in the year overall and bringing output to below its pre-pandemic level of 2019. Output in machinery manufacturing was down by a larger 2.2 percent and was also lower than its pre-pandemic level. The metal industry curbed production by a lean 0.8 percent, while the food industry lowered production by 1.8 percent.
United States: Industrial production*, Purchasing Managers Index
Industrial production (right axis) Purchasing Managers Index, seasonally adjusted (left axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis (CPB)
At the start of the first quarter 2025, manufacturing output picked up again. According to official US figures, producers of computers and data processing equipment and the pharmaceutical and electro industry continued their upward trajectory. Machinery manufacturers also expanded their activity. Vehicle producers decreased output further at the start of the year. The purchasing managers’ index for manufacturing was above the 50-point mark for the first time in six months in January 2025, indicating expanding production. In February, the index climbed to 52.7 index points, its highest level in 32 months, before falling back down to 49.8 points. Despite a small
0.3 percentage points and the lower growth expected this year compared to the previous year, we expect US industrial production to increase by one percent in 2025.
China
China’s industry (manufacturing excluding construction) continued the uptrend which started in the second half of 2023 into 2024. According to figures from the Netherlands Bureau for Economic Policy Analysis (CPB), industrial production increased in the first quarter by 1.3 percent over the previous quarter (up 5.7 percent year on year). In the second quarter, growth faltered somewhat. Production was only 0.5 percent higher than in the same period the previous year. In the two following quarters, industrial activity picked up pace again, growing by 1.3 percent and then 2.5 percent quarter on quarter, and over five percent year on year in both cases. In 2024 overall, industrial production expanded 5.6 percent.
China: Industrial production*, Purchasing Managers Index
Industrial production (right axis) Purchasing Managers Index, seasonally adjusted (left axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis (CPB)
According to official Chinese figures, value added increased in almost all industries in 2024. On average, the annual growth rates in passenger car production averaged 10.8 percent. The chemical industry increased its output by an average of 9.2 percent. The producers of computers and electrical equipment increased their activity on a similar scale (up 11.3 percent). In machinery manufacturing, growth at 5.8 percent was substantially higher than among specialised machinery producers (up three percent). The production of ships, rail vehicles and aircraft rose 9.9 percent, almost twice as much as the previous year. Growth was substantially lower in pharmaceuticals (up 3.6 percent) and in textiles and clothing (up 4.3 percent). The output of paper and metal products both expanded by more than seven percent.
Depending on the data source, China’s industrial output was between three and seven percent higher at the start of the year, year on year. The purchasing managers’ index for manufacturing in China has been above the 50-point threshold indicating expansion since October 2024. In February, it climbed to 50.8 points, its highest level in three months. If production remains at the level recorded at the start of
At 48.3 index points, it has now been below the threshold to expansion of 50 points for nine consecutive months. Japan’s industry started out the year with a positive carryover of 0.8 percentage points. After the weak start to the year, production will have to increase in the coming months to remain steady with last year.
South Korea
South Korea’s industrial production (excluding construction) grew by just over five percent in the first six months of 2024 compared to the same period in 2023. At the start of the second half of the year, activity faltered a little. In the fourth quarter, output rose both quarter on quarter and year on year (up two percent). The strong first half of the year helped lift the annual increase in production to a 3.4 percent. The manufacturing sector recorded a similar trend in production, with an increase of 3.5 percent.
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Source: Macrobond
Among the individual industries of the manufacturing sector, vehicle production recorded a decrease in output of 2.2 percent after three years of growth. The producers of pharmaceutical products continued their yearslong uptrend with an increase in output of 19 percent. Chemicals alone were very much weaker, managing only a 2.1 percent rise. While metalworking companies stagnated in 2024 overall with a minimal nudge up of 0.1 percent, the electro industry recorded a double-digit increase of 16.9 percent. The food industry expanded production by 1.6 percent. South Korea’s machinery manufacturers also recuperated from last year’s decline, expanding output by 0.6 percent.
At the start of 2025, industrial activity has continued to grow. At the start of the current quarter, production was 1.3 percent higher than in the previous quarter and 2.4 percent higher year on year. Production was up across most industries, apart from the energy-intensive industries which saw production slide somewhat. The purchasing managers’ index for manufacturing has been meandering around the threshold to expansion of 50 points for the last four months, dropping to 49.9 index points in February. In view of the strong start to the year and the positive carryover of more than one percentage point, we expect to see production here grow by two percent in 2025 overall.
0.7 percentage points, we expect manufacturing output to decrease by one percent in 2025 compared to the previous year.
European Union
In the European Union, industrial production (excluding construction) in the first quarter 2024 was down 0.6 percent quarter on quarter and 3.9 percent year on year. In each of the following three quarters, production fell by 0.2 percent quarter on quarter. In 2024 overall, industrial production in the EU thus decreased by 2.4 percent compared to 2023. This was also the second decline in a row. Manufacturing output fared even worse, contracting 2.7 percent in 2024.
Among the individual industries of the manufacturing sector, vehicle production registered the steepest drop, falling 8.2 percent. This was also 12.6 percent lower than before the outbreak of the pandemic in 2019. Production in machinery manufacturing and in the electrical industry decreased by seven percent in both cases. Producers of machinery produced close to three percent less in 2024 than in the year before Covid, while the output of the electro industry was 11.3 percent higher than five years ago. The metal producing and metalworking companies curbed production 3.8 percent in 2024, their second consecutive annual drop. Production here was also 7.8 percent lower than in 2019. The chemical industry witnessed its third consecutive year of downward production, with output in falling 2.3 percent in 2024 compared to 2023 and 13.2 percent lower than five years ago. The production of textiles and clothing declined a further 7.1 percent, down to more than 21 percent lower than before the crisis. The few industries that managed to increase production included the food industry (up 1.5 percent) and the paper industry (up three percent). Other transport equipment recorded 5.1 percent higher production than one year ago and 4.6 percent higher than five years ago. Unscathed by the pandemic, pharmaceuticals remained on an upward path since 2013. In 2024, production here was 4.3 percent more than one year ago and 63 percent more than five years ago.
Source: Macrobond
At the start of the first quarter 2025, industrial production was marginally higher than in the previous quarter but more than half a percent lower year on year. Apart from small rises in the food industry and chemicals, industrial activity was down in the heavyweight industries, including the electro industry, metal industry and machinery manufacturing. Production in other transport equipment and pharmaceuticals was down by more than three percent in both cases compared to the previous quarter. The purchasing managers’ index for manufacturing in the EU has remained below the threshold to expansion since July 2022. It has recovered slightly from its low in December 2024 but, at 47.8 index points at last count, is still well below the threshold to expansion. At the same time, EU industry came into 2025 with a negative carryover of more than one half of a percentage point. With no indication of a pick-up in industrial activity anytime soon, we expect production to drop by close to one percent in 2025.
Germany
Germany’s industry (industrial production excluding construction) started off 2024 with production dropping 5.6 percent year on year in the first quarter. The downward trend continued over the next three quarters, but with slightly diminished momentum. Industrial output declined both quarter on quarter and year on year. In 2024 overall, production was 4.6 percent lower than in 2023. Manufacturing output also dropped by 4.6 percent.
Germany: Industrial production*, Purchasing Managers Index
Industrial production (right axis) Purchasing Managers Index, seasonally adjusted (left axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Source: Macrobond
Among the individual industries of the manufacturing sector, the electro industry recorded the steepest drop, with production plunging down 9.5 percent. Production here was lower than in the year before the outbreak of the Covid pandemic for the first time in three years. Vehicle producers produced 7.2 percent less than in the previous year, after recording a double-digit increase in 2023. Germany’s machinery manufacturers saw production fall for the second year in a row, this time by 7.9 percent. Among the energy-intensive industries, output in the metal industry dropped 5.1 percent, and in building materials by 4.5 percent. The chemical industry was able to increase production by 3.3 percent following two very lean years but still produced 15.2 percent less than in 2019. Production in the paper
few industries in Germany produced more in 2024 than in 2019. Germany’s other transport equipment, for example, expanded production by 12.2 percent in 2024, outperforming the European Union as a whole (up 4.6 percent). Although output in this industry in Germany was 7.7 percent higher than five years ago, this increase is extremely modest compared to the 63.2 percent rise exhibited by EU’s other transport equipment industry since 2019. While the electro industry of the EU produced 11.3 percent more than 2019 at last count, Germany’s electro industry produced more than three percent less. The chemical industry and vehicle production have both seen a double-digit fall in production since 2019, both in the EU overall and in Germany. German machinery manufacturers produced 15.4 percent less, delivering a much poorer result than EU machinery manufacturers, which only produced 2.8 percent less. The metal industry trended similarly (Germany: down 14.1 percent; EU: down 7.8 percent). The less energy-intensive textiles and clothing industry performed slightly less worse in Germany (down 19.1 percent) than across the EU overall (down 21.1 percent).
France
France’s industry (industrial production excluding construction) started off 2024 with an increase in production of 0.9 percent year on year. In the second quarter, industrial production then decreased 0.8 percent quarter on quarter and was also lower year on year. In the second half of the year, industrial activity continued to flounder. In 2024 overall, industrial production was 0.2 percent lower than in 2023. Compared to 2019, production was 4.9 percent lower. In the manufacturing sector, the decrease in output was more pronounced at 0.6 percent following seasonal adjustment.
France: Industrial production*, Purchasing Managers Index
Industrial production (right axis) Purchasing Managers Index, seasonally adjusted (left axis) *Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Source: Macrobond
Among the individual industries of the manufacturing sector, output in vehicle production dropped the most, plunging 13.9 percent. The drop in production among France’s machinery manufacturers was only half as large, at minus 7.3 percent. Other industries to record above-average decreases in production were textiles, down 5.1 percent, and metal, down three percent. The electro industry stagnated in 2024 following three years of growth, but production here was still close to four percent
higher than in the pre-Covid year of 2019. While the food industry and other transport equipment recorded small gains in production, chemicals and paper both expanded by more than two percent. The producers of pharmaceuticals increased their output for the eighth consecutive year and, with a rise of eleven percent in 2024, produced a good quarter more than before the outbreak of the pandemic.
At the start of the first quarter 2025, manufacturing output decreased 0.9 percent compared to the previous quarter. It was also more than three percent lower than in the first quarter 2023. The purchasing managers’ index for manufacturing has recovered substantially from its lowest point last year of 41.9 points in December but, at 45.8 points in February and 48.9 points in March, is still in contractionary territory. Although we expect momentum to pick up slightly in the further course of the year, in view of the weak start to the year and the negative carryover of 0.7 percent, we expect production in 2025 overall to decline by around one percent.
Italy
Italy’s industry (industrial production excluding construction) started out 2024 with a drop in production of 1.9 percent compared to the previous quarter. In the second quarter, the fall in production was much less pronounced at 0.9 percent but was still more than three percent down year on year. In the next two quarters, industrial activity continued downward, dropping more than four percent each quarter. In 2024 overall, industrial production dropped by a total of 3.9 percent. Manufacturing output performed slightly worse, with production down 4.2 percent year on year and following calendar adjustment.
Industrial production*, Purchasing Managers Index
Managers Index, seasonally adjusted (left axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Source: Macrobond
Among the individual industries of the manufacturing sector, vehicle production recorded by far the strongest drop, tumbling 22.5 percent. Output in 2024 was also 23.4 percent lower than in the year before the pandemic. Textiles and clothing also exhibited a double-digit fall in production, with a decrease of eleven percent. Italy’s machinery manufacturers produced 6.6 percent less in 2024 year on year, after recording a tiny increase the previous year. They also produced 3.2 percent less than in late 2019. In the electro industry, production was down 1.6 percent. Although this was its second consecutive downward year, production was still 6.6 percent higher than in 2019, the year before
Covid. Among the energy-intensive industries, production in the metal industry was down by 5.2 percent. The chemical industry only slipped down 0.5 percent after two very lean years beforehand, but production was all of 11.5 percent lower than in 2019. The pharmaceutical industry also turned down after two good years (down 1.9 percent), but output here was still a good twelve percent higher than before the pandemic. Going the other way, the paper industry expanded its output by 2.1 percent. The food industry also trended upwards slightly (up 2.2 percent). The last positive exception to the general downturn was other transport equipment which recorded a very solid increase of 8.5 percent.
The first available figures for the current year indicate a slight pick-up on a low level. At the start of the first quarter 2025, production was one percent higher than in the fourth quarter 2024. The purchasing managers’ index for manufacturing has risen steadily since reaching its lowest point of the year last year in November. It had gained almost three index points by February but, at 47.4 index points, was still below the threshold to expansion. In view of the negative carryover of 1.6 percentage points, we expect production in 2025 overall to fall once again, but by two percent which is only half as much as in 2024.
Spain
Spain’s industry (industrial production excluding construction) started out 2024 with solid growth. In the first quarter 2024, production increased two percent compared to the previous quarter and a good one percent year on year. In the second quarter of the year, the upward trend faltered with production down 1.4 percent quarter on quarter. The downward trend continued at the start of the second half of the year. In the third quarter, industrial production fell another 0.8 percent and was also down year on year. In the final quarter of the year, industrial activity picked up again bringing production in 2024 overall half a percent higher. Manufacturing output ended 2024 with an increase of 0.7 percent following calendar adjustment.
production (right axis) Purchasing Managers Index, seasonally adjusted (left axis)
Source: Macrobond *Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Among the individual industries of the manufacturing sector, pharmaceuticals, which has been on a steady upward path since 2015, continued to grow. Expanding 10.1 percent in 2024, the industry exhibited the steepest growth last year. Output here was also one third higher than before the outbreak of the pandemic. Chemicals increased production by 3.4 percent, bringing the overall result for chemicals and pharmaceuticals combined to a rise of six percent. The energy-intensive industry, paper, expanded output by four percent almost regaining its pre-pandemic level. The electro industry also saw production increase strongly, rising by 6.9 percent and bringing production a good 15 percent higher than in 2019. The food industry registered a small increase of 0.7 percent. Spain’s vehicle producers went the other way, curbing production by 3.2 percent, bringing the total volume for the year to just under nine percent lower than in the year before the outbreak of the pandemic. In machinery manufacturing, activity was 1.9 percent down year on year. Metal industry also contracted production, producing one percent less year on year and 5.5 percent less than in late 2019. The textiles and clothing industry was also clearly downwards, recording a decrease of five percent following a drop of almost ten percent in 2023 already.
At the start of 2025, industrial activity in Spain faltered slightly. The latest figures show production slipping down 0.2 percent in the first quarter 2025 compared to the fourth quarter of 2024 following seasonal and calendar adjustment. Production was close to one percent lower year on year. Heavyweight industries, such as vehicle production, machinery manufacturing and the electro industry, all reduced production at the start of the year. The purchasing managers’ index for manufacturing has lost much ground since its interim high in October 2024. At 49.7 index points in February 2025, it dropped below the threshold to expansion. With Spain’s manufacturing sector experiencing a weak start to the year and additionally weighed down by a small negative carryover, we expect production in 2025 to decrease by one percent.
Global trade
After trending downwards in 2023, global trade activity turned up again in 2024. According to figures from the Netherlands Bureau for Economic Policy Analysis (CPB), the global trade in goods increased 1.8 percent year on year in 2024. Global trade had already picked up in the fourth quarter 2023, rising 0.2 percent compared to the previous quarter, and steadily continued to gather steam through to the third quarter 2024 before losing a little momentum in the final quarter of the year. The global trade volume was nonetheless higher year on year, expanding 2.4 percent in the third quarter and 2.9 percent in the fourth quarter.
In 2024, emerging countries exported a total of 6.1 percent more goods than in the previous year. The steepest increases were recorded by China, which expanded exports by 11.3 percent, and the other Asian emerging countries (up 6.1 percent). Latin America, which saw exports fall in 2023, registered a 3.1 percent increase in goods exports last year. Exports from Central and Eastern European Countries rose four percent. Africa and the Middle East was the only region in this group of countries to experience a downtrend, with goods exports 4.5 percent lower than one year ago.
Exports from advanced economies only increased by a total of 0.4 percent in 2024. Japan managed to nudge up its exports by 0.3 percent, while the other advanced Asian economies recorded the strongest increase in goods exports, with a rise of 7.4 percent. The United States contributed the most to growth, however, with exports rising 2.6 percent, the fourth consecutive upward year here. Exports from the other advanced economies also expanded for the fourth year running, though with a considerably lower growth of 0.5 percent. As in 2023 already, the euro area exported less goods than
one year ago (2024: down 2.4 percent) and the United Kingdom experienced the largest drop in exports, with a decrease of 8.3 percent.
The latest figures show a further slight pick-up in trade activity. In January 2025, global exports were 0.1 percent higher year on year, following an increase of 0.4 percent in December 2024. At the start of 2025, exports from advanced economies were 0.6 percent higher than in the previous month which already constitutes the third time that they have outperformed emerging countries. Exports from emerging countries dropped 0.6 percent in the same period but were still 4.9 percent higher than one year ago. The BDI expects world trade to expand by around three percent in 2025. Rising US tariffs and further escalation would bring down growth in the global trade volume to around two percent.
World: Exports according to region of origin
Advanced economies
economies Index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Source: Macrobond
Development of German exports
In the first quarter 2024, German goods exports dropped 2.9 percent year on year. This was mainly due to steeply decreasing exports to the European Union and weak trade with China. In the second and third quarter, exports were only down by a slim 0.9 percent and 0.6 percent respectively. In both quarters, the strong drops in exports to China were more than compensated for by robust increases in exports to both the United Kingdom and the United States. Drops in exports to the EU were also only half as large. In the final quarter of 2024, exports declined 0.5 percent. Trade with the EU picked up slightly, while trade with China deteriorated further. In 2024 overall, German exports were 1.2 percent down on the previous year.
Looking at the destination countries and regions, German exports to the United Kingdom rose the most, registering an increase of 2.4 percent, followed by exports to the United States, which expanded almost as much, growing by 2.2 percent. Exports to the European Union were 1.9 percent down year on year. Trade with China declined substantially more, dropping by 7.6 percent. Exports to the rest of the world only decreased by a modest 0.9 percent.
Germany: Exports according to region of destination
Index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Sources: Macrobond, Deutsche Bundesbank
At the start of the first quarter 2025, exports increased by a minimal 0.1 percent compared to the previous quarter, according to preliminary figures from the Deutsche Bundesbank. Compared to the first quarter 2024, exports were nonetheless down by 0.9 percent. Exports to China and to the United States recorded double-digit decreases in both cases. Exports to the United Kingdom were slightly more than three percent lower and to other countries close to two percent lower. Trade with the European Union also faltered again. In 2025 overall, we expect exports to decline by around 0.5 percent, with the trade in goods set to slightly outperform trade in services based on industry association estimates.
Industries in Germany
Automotive industry: production turns up
Production
In the first two months of the new year, the upward trend in automotive production in Germany continued with year-on-year growth of three percent before, and eight percent after, calendar adjustment. In the second half of 2024, production rose five percent bringing the result for the year up to just a small decrease of one percent. For comparison: across Europe, passenger car production contracted six percent in 2024.
In 2025, European passenger car markets will be focussed on carbon emission regulation. To reach the interim target of reducing the carbon emissions of new cars by 15 percent compared to 2021, electric vehicles need to constitute around 30 percent of all new cars. The German car industry is on a good trajectory here with electric cars accounting for one third of cars produced in Germany last year already. Of these, 78 percent were pure battery electric vehicles (BEV) and the rest plug-in hybrids. In January, the proportion of electric vehicles was almost 40 percent. Germany is the second biggest producer of electric vehicles in the world after China and before the United States. In 2024, BEV fuelled growth, expanding by eleven percent, while petrol-powered cars only grew one percent, plug-in hybrids six percent and diesel cars contracted eleven percent. The clear orientation of the German car industry towards climate-neutral electric mobility should ensure healthy production levels this year as well. We currently expect production in 2025 to increase by a slim one percent.
The green transformation represents huge challenges for the automotive industry and is putting pressure on its workforce. In January, 743,700 people were employed in the automotive industry, which is 36,400 or 4.7 percent less than one year ago. While the cut in the workforce of motor vehicle and engine producers remained moderate at 1.9 percent of the total of 458,900 employees, the number of workers among automotive suppliers, which are particularly affected by the transformation towards electromobility, contracted 9.7 percent down to 245,700. The producers of vehicle bodies, trailers and coachwork employed 39,100 people, which constitutes a decrease of 3.3 percent.
Exports
In the first two months of the year, exports increased five percent up to 527,000 passenger cars. Foreign demand thus drove production up while domestic demand as good as stagnated The proportion of exports increased by more than one percentage point, up to 75.4 percent. The industry’s biggest trade partner in 2024 was the United States with 448,000 passenger cars (up 12 percent), building on its lead over the United Kingdom, which received 390,000 passenger cars (down two percent). France came in third with 203,000 units (up seven percent) and Italy fourth with 195,000 (up four percent), both overtaking China, which received 179,000 units (down 17 percent).
Contact: Alexander Fritz / Phone: +49 30 8978 423 33 / Mail: alexander.fritz@vda.de
more substantial. For 2025, the German construction industry association, the HDB, expects to see another small cut in the workforce of 6,000 down to 910,000.
Contact: Sophie Steffen / Phone: +49 30 21286 144 / Mail: sophie.steffen@bauindustrie.de
Building materials industry: light at the end of the tunnel?
The building materials industry has suffered massive drops in production since the start of the building crisis in 2022, which was triggered primarily by soaring interest rates, high construction costs and deteriorating state subsidies. Between 2021 and 2024, production within the industry decreased by an average of around 25 percent and up to 50 percent in those segments that supply the residential construction industry such as brick, sand-lime brick and aerated concrete. At the start of 2025, production settled down on a low level. Since October 2024, the industry´s average production has turned upwards slightly but is still more than 20 percent below pre-crisis levels.
Production may be bottoming out, but the German Building Materials Association (bbs) does not see a real turnaround in sight yet. Although lending for residential construction has turned up again, neither building permits nor incoming orders have gained much ground. Furthermore, the provisional budgeting of the federal government is causing high investment uncertainty in civil engineering. The bbs thus expects production to stagnate in 2025 at the same level as 2024, with growth possible in 2026.
This assessment is also reflected by the ifo business sentiment barometer for the building materials industry, with ratings on current business and prospects both still deep in negative territory. Capacity utilisation is also correspondingly low among companies in the building materials industry, with rates dropping around 15 percentage points since the start of 2022, down to 70 percent following seasonal adjustment. The workforce has also contracted since spring 2023, although the downward momentum has tailed off most recently.
Production is expected to turn upwards from 2026 onwards, especially on account of the planned special fund for infrastructure. The reliable overhaul of the transport network and other infrastructure should inject substantial momentum in the demand for construction and thus also contribute to the economic recovery of the building materials industry. Prerequisites here are that investments are indeed increased, and, in parallel, planning and approval procedures speeded up and capacities ramped up accordingly
Contact: Christian Engelke / Phone: +49 30 7261 999 29 / Mail: c.engelke@bvbaustoffe.de
Chemical and pharmaceutical industry: setback in chemicals
The German chemical and pharmaceutical industry ended 2024 with a disappointing setback. Instead of the hoped-for economic recovery, the downward trend across much of the German and European industrial sector continued. Demand for chemicals on the European market subsequently remained
weak. Domestic revenue fell further and foreign revenue from European customers also declined. With incoming orders short on the ground, production recorded a hefty drop in the fourth quarter Capacity utilisation stagnated and, running at just over 75 percent, is still not back on profitable terrain. The only positive momentum came from demand among countries outside Europe, but too low to bring about a turnaround. The result for 2024 overall was therefore correspondingly bleak. While chemical and pharmaceutical production levels were one percent higher than in the previous year, this is not a positive result given the downward production recorded in the last few years. Weak demand and strong competition put pressure on producer prices, bringing them down 2.2 percent. At 221 billion euros, revenue was down on the previous year by a good two percent. Business at home was particularly weak, with revenue here dropping four percent. Trade with other countries was slightly better, but still lower than in the previous year with revenue on the most important market, Europe, down year on year. With an expanded workforce in pharmaceutical companies, the workforce of the industry remained steady overall at a high level, numbering around 480,000 employees.
Companies in the industry are not only struggling with the current situation but are also sceptical of the course of business in the months ahead. Prospects as measured by the ifo barometer are oscillating between persistently poor and further deterioration. Noone is expecting recovery anytime soon. German industry is still treading water and the trends in industry and construction are expected to remain weak. The chemical industry is not expecting domestic trade to recover this year. Exports will also remain a struggle this year with the whole European industry battling with similar problems to Germany. Prospects for the rest of the world look brighter, with the economy and industry gradually picking up pace in both Asia and on the American continent. The German chemical industry is only likely to benefit marginally from this upwind though. Trade with the US is jeopardised by tariffs and China´s industry is becoming increasingly independent of imports. During the decades of booming investment in the country, the Chinese chemical industry has built up excess capacities. The global demand for “Made in Germany” chemicals is not likely to pick up in the next few months. German chemical exports are additionally weighed down by their recent drop in price competitiveness. The prospects for pharmaceuticals appear slightly better with demand less sensitive to economic conditions and companies in the industry well-positioned in Germany.
For 2025 overall, the German chemical industry association, the VCI, expects production in the chemical and pharmaceutical industry to stagnate with a rise in pharmaceuticals compensating for a loss in chemicals. The industry’s total revenue is anticipated to drop by around one percent in 2025.
Contact: Christiane Kellermann / Phone: +49 69 2556 1585 / Mail: kellermann@vci.de
German electro and digital industry: subdued prospects
The German electro and digital industry has long benefited from the transformation towards more automation, electrification and digitalisation, outperforming much of the German manufacturing sector between 2020 and 2023. In 2024, however, the weak momentum in key customer industries caught up with the electro and digital industry. The deteriorated economic situation is reflected in almost all relevant indicators. Price-adjusted production of the German electro industry in 2024 was 8.9 percent lower than in the previous year. Revenue (in nominal terms) for 2024 overall was 7.5 percent down
year on year. Capacity utilisation fell continuously over the last year and was down to 73.4 percent at the start of the first quarter of this year which is the lowest it has been since the financial crisis 2007/2008.
Incoming orders in 2024 overall were 9.5 percent down year on year but registered a slight rise of just under two percent in the first month of 2025. A shortage of orders continues to be the largest obstacle to increasing production in the electro industry. In the latest ifo Institute survey, 54 percent of companies surveyed reported a shortage of orders. Business sentiment, which has been in negative territory for more than one and a half years now, recorded another major drop at the end of last year before recovering slightly at the start of the year, with prospects for the next six months brightening up a little (balance in March at plus 7.2 percentage points). On the other hand, most of the companies still rate their current business situation as negative (balance in March at minus 20 percentage points).
The workforce did not contract as much as production levels. Although a shortage of skilled staff is not the main factor keeping production down currently, the shortages experienced following the Covid pandemic are still likely to be very present in the collective memory. The workforce of the German electro and digital industry amounted to just under 890,000 at the end of the year, which is two percent less than at the end of 2023. However, the workforce at that time was the largest it has been in over twenty years. The number of workers on short-time work was on a high level throughout 2024. Currently, around 40,000 workers are still on short-time work. Based on the figures outlined above, the German Electro and Digital Industry Association (ZVEI) expects production to decline a further two percent in real terms in 2025 overall. Although there are some single rays of light, these do not indicate a sustained turnaround yet.
Exports decline in almost all large markets apart from Spain
German electro exports contracted 3.5 percent in 2024 overall. Exports to almost all the top ten destination countries were down, apart from Spain with a slim one percent rise. A large question mark is hanging over the industry’s second largest export market, the United States. Even if the electro and digital industry is less affected by possible US tariffs because many of its products are difficult to substitute and therefore have low price elasticity, if overall demand from the US falls, companies in the industry will certainly be affected indirectly at least
Contact: Marcus Röckl / Phone: +49 69 6302 219 / Mail: marcus.roeckl@zvei.org
Foundry industry in crisis in 2024
In 2024, production in the foundry industry was down 12.9 percent to 3.409 million tonnes. Iron and steel foundries produced 15.2 percent less while nonferrous metal foundries produced 4.4 percent less, reflecting the structural trend towards lightweight construction. Nonetheless both sectors trended similarly in terms of revenue, with decreases slightly over ten percent in both cases. In 2025, industry revenue fell 12.1 percent down to 12.274 billion euros. This reflects the higher dependency of nonferrous metal foundries on carmakers and is why the drop in revenue is similar even though the decrease in production is much less pronounced.
The ceramics industry in Germany is almost exclusively comprised of operators of small plants within the meaning of the German carbon pricing scheme, the BEHG. With this national scheme, policymakers have created competitive disadvantages for the fine ceramics industry in Germany. Germany still has no effective carbon leakage protection for energy-intensive small and medium-sized businesses. Furthermore, the BREF Ceramic Manufacturing sets out unrealistic emission reduction targets which will be mandatory under permitting law. If the new government fails to correct the current course with a turnaround in economic policy, high investment costs and other factors that are detrimental to Germany as an industrial location such as above-average energy costs, high non-wage labour costs and excessive red tape could well signify the end of many companies in the industry.
Contact: Dr.-Ing. Markus Küster / Phone: +49 9287 808 25 / Mail: m.kuester@keramverband.de
Machinery manufacturing: root problem remains shortage of orders
In 2024, production in the machinery and plant manufacturing sector in Germany was 7.2 percent lower year on year following price adjustment. Orders in hand propped up production less and less over the year, with incoming orders eight percent down on the previous year following price adjustment. Domestic incoming orders were particularly disappointing, with yet another double-digit decrease, this time of 13 percent. Orders from abroad were also down, but by a more moderate five percent. In the last few months, foreign orders have stabilised while domestic orders are still pointing down. A turnaround is not in sight. The persistent shortage of orders was regarded as the primary impediment to increasing production in January 2025, selected by 52 percent of companies surveyed. The order shortage is also reflected in capacity utilisation rates While capacities were still running at 85.2 percent in January 2024, not far below the long-term average (86.1 percent), they were down to 78 percent by January 2025. The production capacities of many companies are currently underutilised. There are still more than one million people working in machinery and plant manufacturing in Germany. In the last few months, the workforce has contracted slightly but companies in the industry will try hard to keep their long-term workers given the shortage of skilled staff and the general demographic situation. Companies are making increased use of the tried and tested tools at their disposal, including the reduction of overtime using working time accounts, short-time work and the reduction of temporary staff.
The year 2025 is certainly set to be a challenging one for German machinery manufacturers. The development of the industry going forward depends on many different factors which are currently very difficult to anticipate. By and large, the burdens and challenges are the same as in the previous year, with the addition of further uncertainties in the form of an unpredictable president in the US and a new federal government in Germany. The increasing protectionism around the world is likely to weigh down global trade and thus also affect the export-oriented machinery and plant manufacturing industry in Germany. The threat of tariffs alone is already enough to curb the demand for capital goods as it increases uncertainty. In addition, if the US choses to impose tariffs, consequences will follow, probably in the form of retaliatory tariffs on the part of affected trade partners, which could, in turn, kick-start a spiral and even lead to an all-out trade war. On the other hand, protectionism and deglobalisation will result in the further development and completion of local value chains, both in the United States and China and even in Europe. A reindustrialisation of the United States, especially, could provide further positive momentum for foreign machinery suppliers even if import tariffs are imposed because the
The higher US tariffs on imports of aluminium and the subsequent rechannelling effects on exports to the EU and the announced imposition of reciprocal tariffs are all cause for major concern.
Contact: Oliver Eisenberg / Phone: +49 30 726207 167 / Mail: oliver.eisenberg@kupfer.de
Paper and pulp industry: production and revenue recover slightly in 2024 but environment remains challenging
In 2024, the production of paper, paperboard and cardboard increased by three percent year on year to a total of 19.2 million tonnes. After production fell to its lowest level in the last 20 years in 2023 to almost three million tonnes lower than in 2022, it picked up again in the first six months of 2024 before losing some momentum over the rest of the year. While the production downturn in 2023 affected all segments, the picture in 2024 was more mixed. The industry’s largest segment, paper, paperboard and carboard for packaging, increased production by five percent, up to 12.3 million tonnes. Production of technical and special paper also expanded, rising 1.2 percent to 1.4 million tonnes. Graphic paper, which had suffered a massive 30.5 percent slump in production in 2023, recorded a comparatively small drop of 1.1 percent down to 4.1 million tonnes in 2024. The production of sanitary paper items as good as stagnated at the previous year’s level at 1.4 million tonnes (down 0.6 percent).
Recession in Germany weighs down domestic trade
The recession in Germany caused divergent trends in domestic and foreign trade in 2024. Overall, the volume of paper, paperboard and cardboard sold was slightly higher in 2024 than in 2023 (up 1.8 percent), at 19 million tonnes. Foreign sales rose 4.4 percent while domestic sales slipped down 0.7 percent. This marked a turnaround with foreign sales now outsizing domestic sales. Around 77 percent of the industry’s exports remained in the European Union and Europe. While the recession still dogged the industry’s sales at home, the more positive economic environment in other European countries propped up sales overall. With annual production at 19.2 million tonnes, the German paper and pulp industry maintained its position as the biggest European producer in 2024 and is the fifth largest worldwide, after China, the United States, Japan and India.
Revenue in 2024 down year on year
In 2024, the German paper and pulp industry generated an annual revenue of 15 billion euros (down 2.7 percent). Margins are still very tight on account of the persistently high energy, logistics and commodity costs. Although energy prices have dropped down from their peak in 2022, they are still twice to three times as high as before the crisis. The high regulatory burden in German constitutes an additional impediment to economically viable production in Germany. Despite these challenges, the paper and pulp industry is part of the bioeconomy and, as such, an important driver of the circular economy. Many companies are still investing in sustainable technologies and in the transformation towards climate neutrality. To be able to fulfil its role, the industry needs Germany to increase its appeal as an industrial location in 2025. The industry can only retain its competitiveness if the framework conditions are improved, solutions found for the high energy prices and regulatory obligations reduced.
Contact: Dr. Thomas Moldenhauer / Phone: +49 172 2188 501 / Mail: t.moldenhauer@papierindustrie.de
Pharmaceutical industry: upward trend continues
Although the pharmaceutical industry recorded a decrease in production and sales in 2024, the industry is still getting back to normal after the high production of vaccines during the Covid years. Following drops in production and sales in the wake of this normalisation, pharmaceutical companies are now moving upwards again. The sustained hiring wave is proof that the industry has not been affected by the downturn hitting the rest of the industrial sector. Although the growth rate of the workforce tailed off slightly in the second half of 2024, 2025 should see a tangible increase in new jobs based on hiring plans expressed in the ifo Institute surveys
While domestic sales have settled down to their pre-Covid level and are only expected to rise moderately this year, foreign sales are clearly pointing upwards and should remain so, with incoming orders consistently robust. The industry expects the tariffs threatened by the US administration not to last long and thus only have a temporary effect on foreign trade. In case tariffs are in place over a longer period of time, they may well cause major disruptions to international supply chains. This will not only entail a deterioration of terms of trade with the United States, which is the most important sales market of German pharmaceutical exports after the EU accounting for a quarter of all German pharmaceutical exports. Key inputs that domestic producers buy from the United States will also become more expensive as the tariffs on US imports will increase the costs of US production, part of which is likely to be passed on to customers. All in all, foreign sales should still be able to continue their upward trend, with a good two percent increase in both production and sales in real terms expected for 2025
In the last few years, pharmaceutical companies have continued to invest heavily in Germany despite the difficult environment, including the increased costs for energy-intensive inputs in the wake of the energy crisis. The highly innovative pharmaceutical industry focuses its investment on research and development, which now accounts for 90 percent of total investment. Investment activity is set to continue rising this year, at a similar pace to the last few years
Contact: Dr. Simon Junker / Phone: +49 151 2215 7308 / Mail: s.junker@vfa.de
Steel and metal processing: 2025 set to be challenging
Steel and metal processors in Germany ended the year 2024 on a positive note, with production 3.2 percent higher in December year on year. This was the first month of growth since December 2022 and slimmed the drop in production over the year down to 6.3 percent. Exports contributed to stabilisation with a decline of 4.5 percent, while domestic sales fell 9.6 percent. The industry has now experienced three years of negative growth in a row and the downward momentum even accelerated last year. At least the situation improved in December, bringing the result for the final quarter of the year to only minus four percent which was the best quarterly result recorded in the last six quarters. A knock-on effect of the generally negative trend over the last few years was a three percent cut in the workforce in the course of 2024 Demand would have to rise to trigger a turnaround in worker numbers, but incoming orders in January were 4.5 percent down year on year, and, in 2024, 11.4 percent lower than in 2023. In view of these developments, 2025 is set to be another very difficult year for the industry, especially given the importance of exports to the United States.
The upturn in December turned out to be short-lived with production down 7.5 percent in January 2025. The year nonetheless started off with some positive signs. The utilisation of production capacities was 0.9 percentage points higher in January than in October last year. Although it was still 4.9 points lower than in last January it nonetheless marks a halt to the downward trend. The nosedive in sentiment measured among steel and metal processors in Germany also came to a stop. Although current business, in January, was still rated as similarly poor as in December 2024 (minus 0.2 balance points), prospects for the next six months climbed by 2.9 points. Sentiment brightened further in February. While this may not yet constitute a sustained upturn for the business climate, it is certainly another step out of the prolonged frosty depths. Companies were 2.5 balance points more positive about their current situation than in January. As prospects for the next six months also improved by a good 7.2 points, the business climate improved in the balance of both components by 4.8 points. Business expectations in January improved on the back of a decrease in pessimistic ratings of twelve percentage points. In February, the proportion of optimistic ratings increased by 11.3 percentage points. If sentiment continues to improve over the next few months, the industry may successfully avert another downturn and produce as much as it did last year. To make this happen, the new federal government must do its job and use the new funds to tackle urgent reforms that focus on benefiting society as a whole based on a competitive industry.
Contact: Holger Ade / Phone: +49 211 9578 6822 / Mail: hade@wsm-net.de
Steel industry: demand for steel downward since 2017
In 2024, the demand for steel in Germany dropped for the third consecutive time, down to a new alltime low of around 27 million tonnes of rolled steel (eight percent down on financial market crisis year 2009). This weak performance reflects the German capital goods crisis and the drastically low demand in construction. The downward trend that has beset the industry since 2017 was only briefly interrupted during the Covid pandemic in 2021. Since the last peak in 2017, domestic demand has shrunk by a good third (around 15 million tonnes). This contrasts starkly not only with the rest of the world, but also with other advanced countries (EU 27: down 16 percent, US: down nine percent, Japan: down 20 percent). Worldwide, the steel market even grew by six percent in the same period, driven by India (up 67 percent) and China (up eleven percent). During this time, Germany has fallen from sixth to nineth place in the ranking of the world’s top steel markets.
The focus of the industry, alongside the slump in domestic demand, is primarily the negative developments on the international steel markets. The globally unchecked growth of excess capacities has created a huge pressure to import, despite weak demand on the EU market. This situation is likely to be further exacerbated by the new punitive tariffs of the US. Steel suppliers that have traditionally delivered to the United States and thus lose their market are likely to target the EU market as an alternative.
The production of crude steel in Germany is still on a very low level despite recording a five percent increase in 2024 year on year. Production over the whole year amounted to barely 37 million tonnes of crude steel. Production has not been above 40 million tonnes since 2018. The steel crisis in Germany has continued into 2025. In the first two months of the year, the production of crude steel corresponded
These latter countries are usually not the end consumers though The industry’s most important export market outside of Europe, the United States, saw exports rise slightly, while exports to China and Turkey contracted.
The survey conducted by the German textile and clothing industry association at the start of 2025 showed the downward trend in business sentiment continuing for clothing, as it has done for the last three years, with a deterioration in both the current situation and expectations for the next six months. Textile companies, on the other hand, rated the business climate as more positive at the start of 2025 than in the previous year. The reason for the more positive assessment overall was a clear improvement in short-term prospects which were, to be fair, very poor last year so this is partially a baseline effect.
Contact: Marcus Jacoangeli / Phone: +49 30 7262 2024 / Mail: mjacoangeli@textil-mode.de
Imprint
Federation of German Industries e.V. (BDI)
Breite Straße 29 10178 Berlin
T: +49 30 2028-0 www.bdi.eu
German Lobbyregister Number R000534
Author
Thomas Hüne
T: +49 30 2028 1592 t.huene@bdi.eu
Editorial / Graphics
Dr. Klaus Günter Deutsch
T: +49 30 2028 1591 k.deutsch@bdi.eu
Marta Gancarek
T: +49 30 2028 1588 m.gancarek@bdi.eu
This report is a translation based on „Industriebericht | Industrieproduktion und Handel nach Branchen“, as of 31 March 2025