Industry Report December 2025

INDUSTRIAL POLICY DOSSIER

Industry Report

Industrial production and trade in the individual industries

▪ With growth weak in the middle of the year, the BDI now expects manufacturing output to fall not by one half but by two percent this year. This would be the fourth consecutive downward year for production in the manufacturing sector.

▪ The industrial recession seems to have bottomed out in the European Union already. We are upwardly adjusting our forecast for the current year from minus one percent to plus one percent. The pharmaceutical, metal and electro industries and other transport equipment have all tangibly expanded production. Motor vehicle manufacturing and chemicals remain in recession.

▪ In 2025 overall, German goods exports, in nominal terms, are expected to turn around after two years of downturn. Prospects for industrial exports have improved again recently.

▪ We expect the global trade in goods in 2025 overall to rise by four percent. Goods exports from emerging countries are on track to increase five percent, while exports from advanced economies are heading for an increase of two percent.

Global industrial production

In the first eight months of the year, global industrial production (excluding construction) increased by three percent, according to figures from the Netherlands Bureau for Economic Policy Analysis (CPB). This is the first time since 2022 that industrial production has increased more than the average rise over the last ten years of 2.6 percent. After expanding three percent in the first quarter, the upward pace in industrial activity accelerated up a notch to 3.1 percent in the second quarter.

Production expanded primarily among emerging countries, where industrial activity was more than four percent higher than in the previous quarter in the first two quarters of the year. Among advanced economies, production was also upward after two years of downturn, with industrial output increasing by three percent overall in the first eight months of the year compared to the same period last year.

The latest figures show an increase in global industrial production in August both month on month and year on year, indicating continuing upward momentum. The global purchasing managers’ index for manufacturing has also been trending positively, in October it was at 50.8 index points, its third consecutive month in expansionary territory. In view of the positive development in the first six months of the year, we are upwardly adjusting our growth forecast for global industrial production from 2.5 percent to three percent in 2025 overall.

index: two-month average, after calendar and seasonal adjustments, in percent, year on year Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis, eigene Berechnungen

Advanced economies

In the advanced economies, industrial production recorded its first year-on-year increase in the last two years in the first quarter 2025, going up by 1.5 percent. In the second quarter, activity rose on a similar scale, expanding 1.4 percent. The upward trend continued at the start of the second half of the year, with industrial production among advanced economies rising by 1.4 percent year on year in August. Among the advanced economies, Asian countries (excluding Japan) recorded the strongest increase in output by far. In the first eight months of the year, production here was up by 7.3 percent year on year. Industrial activity increased by somewhat more than one percent in the United States, the euro area and Japan. While production stagnated in the United Kingdom, activity in the remaining advanced economies (excluding Asia) decreased slightly year on year.

In the further course of the year, the upward trend is likely to lose a little steam. According to the latest figures, industrial activity was slightly lower than in the previous month but still higher year on year. The purchasing managers’ index for this group of countries has been above the 50-point threshold indicating expansion since August 2025. In October 2025, it inched up further to 50.6 points. We expect industrial activity to remain stable in the fourth quarter and are therefore upwardly adjusting our growth forecast from one half a percent to 1.5 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 (CPB)

Emerging countries

Among emerging countries, industrial production increased steeply at the start of 2025, fuelled by the fast pace of expansion in China. Industrial output also rose by almost two percent in the countries of Central and Eastern Europe and in Latin America. In the second quarter, industrial production among emerging countries continued to increase (+4.6%), with momentum rising across almost all regions. The only exception here was Africa and the Middle East where activity dropped for the third successive quarter. In the first two months of the third quarter, the upward trend continued, with industrial production 4.4 percent higher year on year as per August 2025. As in the previous years, Chinese industry was the engine of growth, expanding production by 6.3 percent, followed by Central and Eastern Europe, where industrial production was up by 2.2 percent. Latin America and Africa and the Middle East also registered growth rates of more than two percent. Asian emerging countries excluding China, recorded the lowest growth, rising only 1.4 percent in the first eight months of the year.

Industrial production is set to continue increasing in the last few months of the year among emerging countries. The purchasing managers’ index for this group of countries has been above the threshold of 50 index points indicating expansion since June 2025 and was at 51.1 points in October 2025, which signalizes a stable level of industrial activity in the fourth quarter. We are therefore upwardly adjusting the growth we forecast in spring of three percent up to 4.5 percent.

Africa/Middle East

Latin America

Central and Eastern Europe

Asia (excluding China)

China

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)

United States: Industry slowly gathering pace

After moving sideways for the last two years, US industry has picked up a little momentum. In the first quarter 2025, industrial production (excluding construction) was 1.2 percent higher year on year after seven quarters without growth. Production expanded particularly among producers of computers and chemicals. In the second quarter 2025, industrial output increased again, this time by 0.9 percent. The upward trend continued at the start of the third quarter. In the first eight months of the current year, production was 1.1 percent higher than in the same period last year.

In the manufacturing sector, output increased slightly less, rising by 0.7 percent in the same period. Among the individual industries, producers of computers recorded the highest growth in production at 6.4 percent, followed by chemicals where output expanded 4.1 percent. Machinery and motor vehicle manufacturing also experienced upwind, both expanding production by a slim 0.5 percent. Going the other way, production in food was down by 0.3 percent and in the metal industry by 1.1 percent.

The latest figures show overall momentum continuing to increase. Manufacturing output in the calendar and seasonally adjusted two-month comparison July/August 2025 was up by 0.1 percent compared to the previous two months and up by one percent year on year. At the same time, the purchasing managers’ index has now been in expansionary territory for three consecutive months, standing at 52.5 points in October. We are sticking to the growth rate we forecast in spring and still expect manufacturing output to increase by one percent in 2025 overall.

*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year

Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis (CPB)

China: Industry continues to grow

The Chinese industry continued to grow at the start of 2025. According to figures from the Netherlands Bureau for Economic Policy Analysis (CPB), industrial production was up by 1.8 percent in the first quarter over the previous quarter, and up 6.3 percent year on year. Official Chinese figures show that motor vehicle manufacturing and other transport equipment (aircraft, rail vehicles, etc.) and information and communication technology each expanded by more than ten percent. In the second quarter, production was up 6.4 percent year on year. Again, motor vehicle manufacturing and other transport equipment were both up by more than ten percent. While the output of textiles (+2%) and machinery (+3.5%) recorded below-average growth, the production of cement took a tumble, contracting 6.1 percent.

Output continued to recover according to the latest figures, with figures from the CPB showing an increase in Chinese industrial output of six percent year on year in the first two months of the third quarter. Industrial activity also increased compared to the previous period of May and June 2025, going up by 0.4 percent. In the third quarter, production in other transport equipment and information and communication technology recorded the highest growth. Motor vehicle manufacturing increased by eleven percent and machinery manufacturing by a good nine percent. The production of cement continued to decrease, going down 6.6 percent. Overall, Chinese industrial production was around six percent higher in the first eight months of the year than in the same period the previous year, depending on the data source.

The purchasing managers’ index for manufacturing has been above the threshold value of 50 index points for the last three months. In September, the index climbed to its highest level in six months of 51.2 points, before slipping down to 50.6 points in October. It was nonetheless still in expansionary territory, indicating that production could well maintain its current momentum throughout the fourth quarter. For 2025 overall, we are narrowing our growth forecast from between five and seven percent and now expect industrial production to increase by six percent.

index: two-month average, after calendar and seasonal adjustments, in percent, year on year

Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis (CPB)

Japan: Industrial output increases for the first time in three years

The Japanese industrial sector expanded for the first time in three years. At the start of the current year, industrial output (excluding construction) was 1.1 percent higher than in the first quarter of last year. In the second quarter, output increased by a further 0.9 percent. Although the upward momentum subsided slightly in the middle of the year, production was still 0.8 percent higher overall in the first nine months of the current year compared to the same period last year.

Manufacturing output rose 1.3 percent year on year in the first nine months of the year. Among the individual industries, production in machinery manufacturing was up by 1.2 percent. Japan’s automakers increased their output by a slightly higher 1.8 percent. Chemicals together with pharmaceuticals increased production by a solid 7.1 percent. Base chemicals were much weaker, with production dropping 1.1 percent. The electro industry continued its downward trend from last year, declining by another 4.4 percent. Energy-intensive industries were also downwards, with paper and ceramics curbing their output by 1.2 and 2.4 percent respectively, the metal processing industry by 1.5 percent and the cement industry by 3.8 percent.

Japan’s industrial activity lost momentum at the end of the third quarter. In the calendar and seasonally adjusted two-month comparison August/September 2025, production was down by 0.7 percent compared to the previous two months. The electro industry and machinery manufacturing both saw production decrease tangibly. The purchasing managers’ index for manufacturing has lost ground after reaching its highest level of the year in June. In October, the index fell for the second time in a row, dropping back into contractionary territory to 48.2 points. Even if production drops slightly in the fourth quarter, we are upwardly adjusting our growth forecast from spring of stagnation and now expect to see an increase of one percent this year overall.

Source: Macrobond

South Korea: Industry remains upward

In South Korea, the industrial sector (excluding construction) started out the first quarter of the year increasing output by 3.1 percent. This positive start to the year was largely due to pharmaceuticals, which expanded production by a good sixth year on year. In the second quarter, output faltered slightly although it was still more than one percent higher year on year. In the third quarter, South Korea’s industry continued to grow. Up to and including September, industrial output was 2.5 percent higher than in the same period last year.

In the manufacturing sector, output was up by 2.6 percent year on year in the first nine months of the current year. Among the individual industries, the output of pharmaceuticals was 7.8 percent higher, with growth not quite as high as in the electro industry, which recorded an increase of 13.4 percent. Motor vehicle manufacturing and automotive parts only increased output marginally (up 1.1 percent) while South Korea’s machinery manufacturers recorded a rise in output of 5.6 percent. The metal processing industry curbed production by a hefty 5.4 percent, while chemicals only dropped by a lean 1.1 percent.

For the rest of the year, we expect South Korea’s industry to register a sideways movement. In the two-month calendar and seasonally adjusted comparison August/September 2025, industrial production was up on the previous two months. However, the purchasing managers’ index for manufacturing lost ground after climbing to its highest level in 14 months in September, dropping back down into contractionary territory at 49.4 index points in October. In view of the development this year so far, we are upwardly adjusting the growth we forecast in April of two percent slightly, up to 2.5 percent.

Source: Macrobond

United Kingdom: Downward industrial production despite strong start to the year

The industrial sector in the United Kingdom is struggling to get out of recession. In the first quarter, industrial production (excluding construction) increased by 0.6 percent compared to the previous quarter and was also slightly higher year on year. Machinery manufacturing and other transport equipment made a significant contribution to growth, compensating for the weak development among energy-intensive industries. In the second quarter, industrial activity turned down again, decreasing 0.8 percent compared to the first quarter. The downward momentum continued in the third quarter, with production 0.4 percent lower year on year in the first nine months of the year.

Manufacturing output was down 0.3 percent in the same period. Among the individual industries, motor vehicle manufacturing, down 8.3 percent, and the metal industry, down 7.6 percent, recorded the biggest plunges. Textiles and clothing also dropped output by a tangible 4.3 percent. Among the energy-intensive industries, the production of chemicals was down by 2.9 percent. The production of pharmaceuticals and other transport equipment increased by more than six percent in both cases. Machinery manufacturers also recorded a tangible upward movement, with production increasing 4.7 percent. Producers of electrical equipment (+2.5%) and producers of data processing equipment and optical productions (+3%) also saw output grow.

The purchasing managers’ index for manufacturing has been in contractionary territory for one year now and initially continued to lose ground in August and September. In October, it climbed to its highest level in 12 months, almost reaching expansionary territory at 49.7 points. In view of the development this year so far, we are upwardly adjusting the growth we forecast in spring from minus one percent and now only expect production to drop by 0.5 percent year on year.

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

European Union: Industrial output picking up pace

In the European Union, industrial activity picked up pace at the start of the year. In the first quarter 2025, industrial production (excluding construction) increased by 1.3 percent compared to the previous quarter and one percent compared to the first quarter last year. The increase was driven largely by a steep rise in the output of pharmaceuticals and a slight rise in motor vehicle manufacturing In the second quarter, production increased again slightly, up 1.3 percent year on year. In the third quarter, industrial activity continued its upward path. Overall, in the first nine months of the year, EU industrial production was 1.3 percent higher than in the same period last year.

In the manufacturing sector, output rose by a slightly higher 1.4 percent in the first nine months of the year. Among the key industries, pharmaceuticals recorded the strongest increase by far, with production rising by 18.6 percent. The second highest increase was much lower and was registered by other transport equipment which saw output increase 4.4 percent. The electro industry expanded its activity by 1.5 percent, outperforming foods, which rose 0.9 percent. The producers of textiles and clothing registered the largest decrease, with output falling 4.5 percent, followed by vehicle manufacturing and chemicals which both saw production contract by 3.4 percent. Machinery manufacturing registered a 1.6 percent drop in output. Production in the energy-intensive industries paper and metals only reduced marginally, dropping by 0.6 percent and 0.4 percent respectively.

The latest developments indicate a stable sideways movement. In the calendar and seasonally adjusted two-month comparison August/September 2025, manufacturing output was 0.2 percent lower than in the previous two months but still a good one percent higher year on year. At the same time, the purchasing managers’ index for manufacturing turned up again at last count. In October, the index stood at 49.8 points, only just below the threshold to expansion of 50 points. We are upwardly adjusting our forecast from spring of minus one percent and now expect production to increase by one percent this year overall.

production (right axis) Purchasing Managers Index, seasonally adjusted (left axis)

index: two-month average, after calendar and seasonal adjustments, in percent, year on year

Source: Macrobond

Germany: Production heading for fourth consecutive downward year

In Germany, industry got off to a good start in 2025. Industrial production (excluding construction) increased 0.9 percent in the first quarter 2025 compared to the previous quarter. This was the first quarterly growth registered in seven quarters, although year on year was still negative. In the second quarter, industrial activity turned down again, dropping 0.4 percent quarter on quarter. Apart from motor vehicle manufacturing and other transport equipment, all other industries pointed down. At the start of the second half of the year, the downward trend accelerated. In the first nine months of the year overall, industrial production was 1.5 percent lower than in the same period last year.

In manufacturing, output up to and including September was 1.8 percent lower following calendar and seasonal adjustment. Apart from food, beverages and tobacco (+0.4%) and pharmaceuticals (+2.4%), production in all other industries pointed down. Textiles and clothing recorded the most pronounced drop in output, at minus 4.4 percent, followed by chemicals, vehicle manufacturing and machinery manufacturing which each decreased production by somewhat more than three percent. The paper industry and the metal industry curbed their output by 2.8 percent in both cases. Production in the electro industry declined by 0.6 percent. Other transport equipment also saw production fall this year after four years of growth.

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

The outlook for the final quarter of the year is uncertain. More than every third manufacturing company is suffering from a lack of orders and, according to the ifo business climate survey, the majority of companies surveyed rated current business as negative rather than positive. Furthermore, the latest figures for industrial production in the two-month comparison August/September 2025 compared to the previous two months show a drop in production of 2.9 percent. This is the steepest fall in over three years. Sentiment indicators are pointing the other way, though. In October, the purchasing managers’ index for manufacturing rose slightly. In October, it stood at 49.6 points which is only just below the threshold of 50 above which the index indicates expansion. In view of industry assessments and the course of production so far this year, we are downwardly revising the production decrease we forecast

in spring of 0.5 percent and expect production to decrease by two percent in 2025 overall. This would be the fourth consecutive year in Germany of declining manufacturing output.

German industry compared to EU industry

The steep increase in energy prices in 2022 has left a considerable mark on German industry. While manufacturing output in the European Union in the third quarter 2025 was one percent higher than the annual average in 2021, the German industry produced 5.4 percent less in the same period. Germany was not the only country to be affected by the energy price shock. Production drops on a similar scale were also recorded by Hungary, with minus five percent, and Italy, with minus 5.6 percent. Manufacturing output in Spain was 2.7 percent higher than in 2021 at last count. In France, production was 2.7 percent higher and, in the Czech Republic, 3.9 percent higher. Sweden’s industry appears to have been unaffected by the energy price shock. Production here was 7.4 percent higher than in 2021. Production in Poland fared even better on an EU comparison, expanding 11.5 percent

Manufacturing production* by country since 2021

*seasonally and calendar adjusted, six-month-average, 2021=100

Sources: Macrobond, own calculation

France: Production likely to increase slightly following contraction last year

France’s industry got off to a slow start at the turn of the year. In the first quarter 2025, industrial production (excluding construction) recorded a slim increase in production of 0.2 percent over the previous quarter. In the second quarter, industrial activity picked up momentum, rising 0.7 percent compared to the previous quarter. Year on year, production was nonetheless down in both quarters. At the start of the second half of the year, momentum increased substantially. Output was again higher than in the previous quarter as well as 1.1 percent up on the third quarter 2024. In the first nine months of the current year overall, production was level with last year’s performance in the same period.

In the manufacturing sector, production was up by 0.1 percent up to and including September. Alongside sharp increases in other transport equipment (+8.5%) and textiles (+6%), motor vehicle

manufacturing and the electro industry both increased their production by 0.6 percent in the first nine months of the year. The pharmaceutical industry expanded output for the tenth consecutive year. Up to and including September, production was 1.6 percent higher than one year ago. Among the energyintensive industries, the chemical industry saw production decrease 3.9 percent, the paper industry was down 2.2 percent and the metal industry down 1.5 percent. In machinery manufacturing, production continued its decline, going down 0.3 percent following a strong decrease the previous year already

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

Industrial activity has lost steam somewhat towards the end of the year. In the calendar and seasonally adjusted two-month comparison August/September 2025, industrial output was 0.8 percent lower than in the previous two months, after rising consecutively the previous three months. Going the other way, the purchasing managers’ index for manufacturing rose slightly at last count. At 48.8 points in October, it is nonetheless still in contractionary territory. Based on the results of the year so far, the production decrease of one percent we forecast in spring is becoming increasingly unlikely. We are therefore upwardly adjusting our forecast slightly and now expect the output of France’s manufacturing sector to stagnate this year overall compared to last year.

Italian production set to decrease for the third consecutive year

In Italy, industrial production (excluding construction) increased by 0.5 percent in the first quarter 2025 quarter on quarter but was 1.8 percent lower year on year. In the second quarter, industrial activity continued to increase but was again lower year on year, this time by 0.6 percent. At the start of the second half of the year, the recovery recorded a setback. All in all, industrial production in the first nine months of the current year was 0.9 percent down on the same period last year.

*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year Italy: Industrial production*, Purchasing Managers Index

Industrial production (right axis) Purchasing Managers Index, seasonally adjusted (left axis)

Source: Macrobond

The manufacturing sector registered a slightly bigger drop in production over the same period, decreasing by 1.1 percent following seasonal and calendar adjustment. Among the individual industries, the producers of motor vehicles and automotive components suffered the biggest drop by far, with output falling 13.4 percent. Compared to 2019, the year preceding Covid, production was more than 28 percent lower. Output in textiles and clothing also dropped steeply, falling 6.5 percent. Among the energy-intensive industries, chemicals curbed its output by two percent and the metal industry by half a percent. Going the other way, paper producers recovered somewhat (+0.5%). In the less energyintensive industry of machinery manufacturing, production was only down by a slight 0.4 percent. Increases in production were recorded by pharmaceuticals, up 2.6 percent, other transport equipment, up 2.4 percent, and food, up 2.2 percent. Output in the electro industry also increased a little, expanding 0.6 percent in the first nine months of the year.

Production is not expected to contract tangibly in the final quarter of the year. In the calendar and seasonally adjusted two-month comparison of August/September 2025, industrial production was 0.5 percent down on the previous two months after recording growth continuously in the seven previous months but remained positive year on year. The purchasing managers’ index has been below the threshold to expansion of 50 points for the last two months but nevertheless reached its second highest level this year in October at 49.9 points. In 2025 overall, we still expect manufacturing output to be lower than in the previous year, but only by one percent rather than the minus two percent we forecast in spring.

Spain: Industry continues to grow

Industrial activity in Spain faltered at the start of the year. Industrial production (excluding construction) recorded a drop of 0.8 percent in the first quarter 2025 year on year. Although the majority of industries saw production expand, the drops in machinery manufacturing and the double-digit fall in

production among motor vehicle manufacturers brought the overall result down. In the second quarter, industrial production picked up pace, rising 0.9 percent both year on year and quarter on quarter. The upward trend continued at the start of the second half of the year, bringing Spain’s industrial production up one percent in the first nine months of the year compared to the same period last year.

In the manufacturing sector, output only increased by 0.5 percent in the same period. Among the individual industries, production in the electro industry and in other transport equipment recorded the strongest growth, going up by 3.8 percent in both cases. The pharmaceutical industry did not perform quite as well as it did last year but was still able to expand production by a solid 2.4 percent. The metal industry had increased its output by 1.7 percent up to and including September after three years of trending downwards. The food industry recorded an increase on a similar scale, rising 1.8 percent. Motor vehicle manufacturing proved unable to compensate for the drop seen in the first quarter of the year. Up to and including September, output was 4.3 percent down year on year. Machinery manufacturing was also down (-1.4%) as was textiles (-2.1%). The chemical industry did not maintain the positive trend seen last year, curbing its production by 0.4 percent.

Spain: Industrial production*, Purchasing Managers Index

index: two-month average, after calendar and seasonal adjustments, in percent, year on year

Source: Macrobond

The latest available data indicates a slight downward trend. According to the most recent figures, manufacturing output in the two-month comparison August/September 2025 was 0.2 percent lower than in the previous two months. Production was nonetheless two percent higher year on year. The purchasing managers’ index for manufacturing is also pointing towards a pick-up in momentum and has remained above the threshold of 50 indicating expansion since May 2025. In October, it reached its second highest level of the year at 52.1 points. In view of the course of production so far this year and the positive prospects for the fourth quarter, we are significantly upwardly revising our forecast from spring. Rather than a decrease in production of one percent as expected in spring, we now forecast manufacturing output to increase by 0.5 percent in 2025 overall.

Global trade activity recorded a robust increase at the start of the year. In the first quarter 2025, the global trade volume was 2.3 percent higher than in the previous quarter, according to figures from the Netherlands Bureau for Economic Policy Analysis (CPB). The steep increase was caused in part by activity brought forward in anticipation of the new US tariffs. In the second quarter, the upward trend continued at a reduced pace (+0.6%). Up to and including August, the global trade volume was 4.7 percent higher than in the first eight months of the previous year.

Emerging countries exported six percent more goods overall in the first eight months of the year compared to the same period last year. Among the individual groups of countries, exports from China increased the most, rising 8.6 percent. Exports from Latin America also increased above average, rising 7.2 percent. Asian emerging countries (excluding China) also exported more than the global average, with exports expanding 5.3 percent. The exports of Africa and the Middle East only rose by a slight 1.8 percent. Going the other way, exports from the emerging countries of Central and Eastern Europe were down by a slight 0.9 percent.

World: Exports according to region of origin

economies

economies

Index: two-month average, after calendar and seasonal adjustments, in percent, year on year

Source: Macrobond

The exports of advanced economies were 2.9 percent higher overall up to and including August 2025 compared to the same period last year. The trends in exports within this group of countries were very mixed. While exports from Japan increased 5.9 percent in the first eight months of the current year, the group of advanced Asian economies without Japan recorded the steepest rise, with exports surging up 13.7 percent. The United States also contributed upward momentum, exporting 1.8 percent more goods. Exports from the remaining advanced economies also increased 1.8 percent. The situation was different in Europe, with exports from the euro area contracting 0.6 percent. The United Kingdom exported 1.9 percent less goods than one year ago.

The latest figures show trade activity diminishing slightly. Global exports were 0.2 percent lower in August 2025 than in the previous month, pulled down by the weak performance among advanced economies, whose exports dropped 1.2 precent at last count. At the same time, exports from emerging

countries increased 1.4 percent. Even if trade activity stagnates until the end of the year, the global trade in goods this year is set to be over four percent higher than last year which is more than twice as high as forecast in spring 2025.

Development of German exports

German exports managed to gain some ground following the turn of the year 2024/2025. In the first quarter 2025, exports were slightly higher than in the same period last year, up 0.5 percent in nominal terms. Trade with the United States picked up ahead of the new tariff policy, with exports to the country up 2.6 percent. Exports to China, which have been weak since late 2022, continued their downtrend in 2025. Exports to the country dropped by a steep 14.4 percent. Exports to the United Kingdom were 2.2 percent down year on year. Alongside slightly increasing exports to the EU (+0.2%), exports to the rest of the world also increased (+4.7%).

In the second quarter 2025, exports to the United States suffered a rebound, falling 9.8 percent. Exports to China were also markedly down, falling 14 percent. Trade with the United Kingdom more or less stagnated (-0.7%), as did exports to the remaining countries. Exports to the EU increased 2.2 percent. Overall, German exports were still down 0.7 percent in the second quarter.

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

Industries in Germany

Automotive industry: Car production up slightly

Production

In the first ten months of the year, German carmakers produced 3.5 passenger cars in Germany. That corresponds to an increase of a good one percent compared to the same period last year. In view of the major challenges facing the industry, in the form of the green transformation, the interim target for carbon emissions, higher US tariffs, stagnation on the domestic market and supply problems with semiconductors, this was a good result for the German automotive industry. The industry is remaining loyal to Germany as a production location despite the country’s high labour and energy costs and excessive bureaucracy. For the year overall, we expect production to increase two percent, up to 4.15 million cars

The defining characteristic of the year 2025 for the automotive industry is the progressive advance of electric mobility, also among German producers on the domestic market. Germany is the second biggest producer of electric vehicles in the world after China and before the United States. Up to and including September, 1.26 million electric passenger cars (+29%) were produced in Germany, of which 916,000 (+21%) were fully battery electric vehicles (BEVs). The high demand for plug-in hybrids (PHEVs) demonstrates that the transformation is a gradual process. In the course of the year so far, 345,000 PHEVs (+57%) were produced in Germany. The proportion of electric vehicles of total domestic production was 40 percent. Germany as an automotive production location is therefore well on track to adhering to the ceilings for carbon emissions set down by the EU. The stringent national carbon emission regulations coupled with a demand among customers for electric mobility that is still too subdued to reach the targets is nonetheless putting high pressure on the overall market volume.

Capacity utilisation rose to 83.5 percent in the fourth quarter following seasonal adjustment, which is the highest level seen in the last six quarters. The order situation remains sluggish, though. The backlog of domestic orders has returned to a normal level following the record highs measured in the middle of 2022 and is continuing downwards (-3% in October). At meanwhile five percent, domestic backlog is now lower than it was six years previously. At the same time, orders from abroad were down by almost ten percent in the first ten months of the year.

The green transformation is one major factor putting pressure on workforce numbers in the car industry. In September, the automotive industry employed 721,400 persons, which is 6.3 percent less than one year ago. While the cut in the workforce of motor vehicle and engine producers remained moderate at 3.8 percent of the total of 446,800 employees, the number of workers among automotive suppliers, which are particularly affected by the transformation towards electromobility, contracted 11.1 percent down to 235,400. The producers of vehicle bodies, trailers and coachwork employed 39,200 people, which constitutes a decrease of four percent.

Exports

In the first ten months of the year, exports remained level with last year at 2.7 million passenger cars. The proportion of electric vehicles of total cars exported was a high 41 percent. The majority of cars produced in Germany and exported to Scandinavia, the Benelux countries, France and Spain are now electric. The industry’s biggest trade partner between January and September 2025 was the United

Kingdom with 316,000 units (+5%), which overtook the United States, where the new tariffs curbed demand down to 312,000 passenger cars (-6%). Italy took third place with 158,000 passenger cars (+10%), ahead of France, which received 146,000 units (-6%). China dropped down to ninth place, tumbling 48 percent down to 80,000 units.

Contact: Alexander Fritz / Phone: +49 30 8978 423 33 / Mail: alexander.fritz@vda.de

Construction industry: Stabilising at low level

Compared to the start of the year, sentiment in mainstream construction has improved markedly following four years of downward revenue. The only reason for the improved mood, however, are positive prospects on account of the announcement of the Special Fund for Infrastructure and Climate Neutrality. While business prospects have gradually improved from minus 40 points after seasonal adjustment in January to minus 19 points in October, the balance of current business has remained almost unchanged at minus 11 points. According to a survey conducted by the German Chambers of Industry and Commerce in the autumn of 2025, construction companies are most worried about the high labour costs and steep energy and commodity prices.

The number of building permits (figures only available for building construction) is an advance indicator of the trend going forward. Following double-digit drops in the two previous years, the estimated construction costs in residential construction were up by around 7.5 percent between January and August 2025. The number of permits for apartments in multi-family dwellings was up by 6.5 percent compared to the same period last year, although still around 36 percent below the 2021 level. Building permits for commercial construction were down by around one percent, while estimated construction costs in public building construction were up by around 13 percent in real terms

Incoming orders in mainstream construction were up by 6.5 percent in real terms between January and August 2025, following a reduction of 0.7 percent in real terms in 2024. While incoming orders in commercial construction, commercial civil engineering and other civil engineering (particularly in bridge construction) were boosted by individual large-scale projects, incoming orders in road construction were down by a hefty 9.2 percent on account of the interim halt on awarding new contracts and the sluggish order placement. Incoming orders in residential construction were up by 8.3 percent in the first eight months of the year but from a very low level. Within the space of one year, the reach of orders in hand in this segment rose from 3.1 months to 3.8 months in October 2025. The reach of orders in hand in civil engineering remained constant at 4.1 months.

From January to August 2025, companies in mainstream construction recorded an increase in revenue of one percent compared to the same period last year, thus exceeding expectations. For the year overall, the construction industry now expects mainstream construction revenue to stabilise slightly. Revenue is again expected to drop in residential construction, but on a considerably more moderate scale than in the last few years. The trends in commercial construction are divergent. While weak industrial activity is impacting building construction, individual large orders, particularly from Deutsche Bahn and electricity suppliers, are boosting demand in commercial civil engineering. In public construction, revenue for the year overall is expected to stabilise and remain level with the previous year.

It is now of crucial importance that expenditure at the federal, state and municipal level for investments under the Special Fund of Infrastructure and Climate Neutrality now flows as quickly as possible into concrete orders and construction projects. We nonetheless assume that a clear positive momentum will only unfold from 2027 and 2028 onwards. The labour market for construction has remained relatively stable in the last few years despite downward revenue. In 2024, the construction industry recorded the first contraction of its workforce in 15 years, with the number of workers dropping 1.2 percent down to 916,300. After expanding one percent in the first eight months of the year, the labour market for construction is expected to turn up again. On account of the progressive contraction of the manufacturing sector, there should also be more workers available for the construction industry again from other industries.

Contact: Sophie Steffen / Phone: +49 30 21286 144 / Mail: sophie.steffen@bauindustrie.de

Building materials industry: Cautious optimism following prolonged years of crisis

The situation on the building materials industry remains strained as the end of 2025 approaches, even though production has stabilised in the course of the year, ending the downward trend that had continued since 2022. Up to and including September 2025, the drop in production was at around 0.1 percent year on year although it is still around 25 percent lower than in 2021. Segments that supply the residential construction industry such as brick, sand-lime brick and aerated concrete are particularly affected. These segments have seen demand slump by up to 50 percent, with corresponding consequences for employment and the structure of production sites.

With this backdrop, tentative gains in building permit numbers and incoming orders in residential construction do not represent a sustained turnaround, but the downtrend does seem to have bottomed out. More reliable framework conditions for construction prices and interest rates also indicate a slow stabilisation of demand. The German Building Materials Association (bbs) expects production to move sideways on average in 2025 overall

The year ahead should see slight gains starting from the low current level. The reactivation of the EH55 subsidy for apartments that already have building permits could activate part of the backlog in residential construction. Alongside a moderate pick-up in residential construction, transportation infrastructure construction should also gain momentum, not least on account of the Special Fund for Infrastructure and Climate Neutrality. Sustainable growth impetus will only unfold from this fund if it is accompanied by a reform concept aimed at simplifying and accelerating planning and permitting procedures and if funding from the special fund is deployed on top of the regular budget to ensure a significant expansion of investment activity.

Although sentiment has brightened significantly according to the ifo business sentiment barometer, the majority of companies remain pessimistic. Ratings for current business in late October were at minus 20 on balance and prospects were five percentage points down, but this represents an improvement compared to last year of ten and 15 points respectively. The somewhat more positive rating of the order backlog has undoubtedly also contributed to lifting sentiment, even though most companies still regard the level of orders as much too low.

Overall, the worst of the crisis is behind the building materials industry Political and economic framework conditions still need to be improved tangibly, though, for a proper upswing to unfold.

Contact: Christian Engelke / Phone: +49 30 7261 999 29 / Mail: c.engelke@bvbaustoffe.de

Chemical and pharmaceutical industry: A depressed autumn

The year 2025 has not heralded in a turnaround for the German chemical and pharmaceutical industry. To the contrary, production, revenue and prices have been downward from quarter to quarter. Despite the shutdown of plants, capacity utilisation rates have remained well below the normal level. At last count, the capacity utilisation of chemical facilities was down to 70 percent. Sluggish industrial activity across Germany and Europe, the poor competitive position of chemical plants here and global surplus capacities has curbed the chemical industry. Incoming orders between January and September were five percent lower than in the previous year. Companies have too few orders, both from at home and abroad. The production of chemicals was down. Up to September, production was 3.2 percent lower than last year. The pressure on prices remains high while costs are also high. Producer prices were downward over the course of the year and had fallen to 0.3 percent lower than the previous year by September. Lower volumes and reducing prices have also brought revenue down. The revenue of chemicals was 3.2 percent lower than last year up to and including September.

The situation seems to be slightly better in the pharmaceutical industry at first glance. The level of both domestic and foreign orders here remained positive. Production between January and September was 2.4 percent higher than last year and revenue was up by as much as 5.5 percent. However, sentiment is clouding over in the pharmaceutical industry as well, with upward momentum in the industry losing steam throughout the year. The high pressure on prices and costs at home and geopolitical tensions pressing down on growth. Furthermore, extraordinary tariffs are looming in the medium term for exports to the United States, which is the industry’s most important foreign market. Given this context, chemical and pharmaceutical companies rated current business as negative in autumn.

Business prospects in the industry also remained subdued. In the final quarter of the year, the majority of companies were sceptical about the next six months. Confidence and optimism are currently rare on the ground in German industry. The special fund and a few corrections in economic policy have not caused a wind of change yet. The slump in domestic orders in the chemical industry is therefore set to continue, particularly with import pressure continuing to build. The situation in the EU, which is by far the most important export market of the German chemical industry, is not much better. Many industrial enterprises here are also reducing their production levels, not least because of increasing import pressure. The German chemical industry therefore has empty order books in its European trade. Industry is by and large robust in the rest of the world. Although momentum remains low on a historical comparison, industrial production and, with it, the demand for chemicals, is increasing in many other countries. However, as production costs are relatively high in Germany, the German chemical industry is hardly benefiting from this uptrend. Overseas business is therefore also likely to remain sluggish.

The situation is likely to deteriorate further in the coming months. In 2025 overall, production in the chemical and pharmaceutical industry is expected to stagnate at best. The substantial drop in

production levels in the chemical industry is likely to be largely compensated for by an expanded output of pharmaceuticals. With prices decreasing slightly, overall revenue for the industry is set to fall.

Contact: Christiane Kellermann / Phone: +49 69 2556 1585 / Mail: kellermann@vci.de

German electro and digital industry: Restrained recovery, not least due to US tariff policy

After recording a substantial setback last year, the German electro and digital industry has stabilised over the course of this year so far. While individual early indicators point towards a slight recovery, US tariff policy will be contributing a stronger, curbing effect in the remaining months of the year. After the first nine months of the year, German electro industry output is still 0.8 percent below the previous year following price adjustment. Going the other way, aggregate revenue in nominal terms increased 2.4 percent in the first three quarters of the year. Capacity utilisation has recovered slightly from its low at the start of the year, but production facilities are still deeply underutilised at currently 78.2 percent.

Incoming orders, which have been 4.2 percent higher than last year throughout the year so far, from January up to and including September, indicate a slight pick-up in momentum. The development of the ifo sentiment barometer also seems to point the same way, judging by the slight brightening measured here in 2025 so far, but is no cause for much optimism. The majority of electro companies still rate current business as negative (balance in October was at minus nine percentage points), but slightly better than at the start of the year. Business prospects were slightly positive in October (up four percentage points). The companies of the German electro and digital industry employed 879,000 workers as of end of September, which is 1.7 percent less than one year ago. At the same time, the number of workers on short-time work was slightly elevated at 27,000 workers at last count, but this is still well below the record levels seen during the financial crisis and the Covid pandemic. At the start of the year, the German Electro and Digital Industry Association (ZVEI) forecast a decrease in electro production in Germany in real terms of two percent in 2025 overall. This forecast is supported by the data available so far so remains valid.

US tariffs could lower German electro exports to the United States by up to 20 percent

The exports of the German electro and digital industry increased by 3.4 percent in nominal terms in the first nine months of the year. While exports to EU countries increased by six percent, exports to China were 9.5 percent down on last year. Electro exports to the United States have also turned down (-1.5%). They had been positive in the first months of the year, probably on account of pulled forward activity. The negative impact of the new US tariffs has meanwhile become visible. The ZVEI expects the volume of exports to the United States to fall by up to one fifth across all segments on account of the tariffs. This could, in turn, cause electro production in Germany, ceteris paribus, to drop by one percentage point.

Contact: Matthias Düllmann / Phone: +49 69 6302 329 / Mail: matthias.duellmann@zvei.org

Foundry industry: In existential crisis

In the first nine months of 2025, production in the German foundry industry was down by 6.2 percent to 2.234 million tonnes. Iron and steel foundries produced 5.8 percent less while nonferrous metal foundries produced 7.7 percent less than in the same period last year. Performance was thus well below the sideways movement expected at the start of the year. On account of a statistical baseline effect, the drop in production for 2025 overall is set to be slightly less pronounced at four percent. To put these figures in context, the industry has meanwhile lost around one third of its pre-pandemic production level. Industry revenue is currently down 9.6 percent this year so far, which is even lower than production. This reflects both the lower prices of some commodities and the industry’s deteriorated competitive position.

A very negative factor for the industry is that foundry imports from Asia are increasing substantially, reflecting the diversion to Europe of considerable volumes of Chinese surplus capacities in the wake of US tariffs. Foundry imports from China to the EU have already risen 14 percent this year so far. A large part of these imports ends up in Germany. While the volume of imports measured in tonnages are increasing, the value of imports remains constant. This observation is particularly alarming as complex anti-subsidy and anti-dumping measures are not really feasible given the very fragmented and multifaceted nature of the foundry industry. The industry therefore urgently needs a broader protection mechanism.

This existential pressure is becoming increasingly apparent in the development of the workforce. German foundries have reduced not just their capacities but also their number of employees. The number of workers in the industry has dropped by 3,600 since the start of the year, which corresponds to a reduction of six percent. Although the capacity utilisation of German foundries at 74.9 percent is higher than one year ago due to adjustments, it is still lower than in the previous two quarters. Utilisation rates remain well below the normal level of around 82 percent

Overall, the German foundry industry is still struggling with lower demand on account of the falling number of conventionally powered passenger cars. The latest alarming development in imports highlights the urgent need for reforms to improve the political framework conditions and tackle the disadvantages of Germany as a production location faced by the energy-intensive foundry industry composed largely of midsized companies. Companies in the industry are losing faith that the federal government will take effective action. The balance of business prospects for the next six months according to the ifo sentiment barometer is at minus 40 points. While it was balanced out in summer, in late October it stood below the level recorded at the time of the pulled forward elections. The outlook for 2026 is correspondingly negative.

Contact: Dr. Tillman van de Sand / Phone: +49 211 6871 301 / Mail: tillman.vandesand@bdguss.de

Glass industry: Situation remains difficult

The business climate in the glass industry, which had been very low since May 2023, has brightened up considerably since April 2025 but is still well below its pre-crisis levels of 2017 and 2018. Since reaching a low in April 2025, the ifo business climate index has increased steadily, with the exception

of August, rising by a total of 15.9 points and climbing to 85.5 points in October 2025. While still a good 20 points lower than its pre-crisis levels of 2017 and 2018, business sentiment is nonetheless on an upward trajectory

Unfortunately, these positive signals are not reflected in the revenue and production figures for the industry published by the German Federal Statistical Office. Production up to and including September was 6.9 percent below the level recorded last year. The trend in revenue is similar. Sales in terms of value was 5.4 percent lower year on year and price-adjusted sales in terms of volume was down by 5.9 percent. The decrease was on an equal scale in both domestic and foreign sales.

The increase in imports and the parallel decrease of exports is worrying. Although the glass industry’s net exports, the difference between exports and imports, is still well in positive territory it is declining continuously every month. This is a sign that the glass industry in Germany is getting less and less competitive. The glass industry is in a difficult economic position. Production has been shut down in part or in full or the whole site has closed at more than six production sites. Policymakers finally need to take urgent action to stop this trend. Measures must include making electricity prices including grid fees internationally competitive for energy-intensive industries to advance the green transformation and secure the competitiveness of the industry, also compared to competitors from the EU.

Contact: Dr. Johann Overath / Phone: +49 211 9022 7820 / Mail: overath@bvglas.de

Aviation: Europe recovers while Germany lags behind

In the course of the year so far, the number of seats available in Germany has improved but is still well below the development in the rest of Europe. The persistent weakness of German industry also affects the aviation sector. At the same time, the whole air travel industry continues to face the challenge of advancing efforts to reduce the carbon emissions in the context of rapidly increasing location and investment costs.

Air travel in Europe had already recovered completely from the slump triggered by the pandemic last year, reaching 101 percent of the seats available in 2019. In the first six months of 2025, the number of seats available to, from and within Europe (EU / EEA / UK) continued upwards and was at 104 percent of the pre-crisis level of 2019. Excluding travel to, from and within Germany, the recovery was already at 107 percent. Looking only at travel to, from and within Germany, the number of seats available was only at 87 percent of the pre-crisis level, which is 20 percentage points lower than in the rest of Europe.

The trend in passenger numbers followed the same trajectory as available seats. In the first six months of 2025, German airports recorded 99.4 million passengers which corresponds to 84 percent of the pre-crisis level and lower growth of only three percent year on year, compared to ten percent year on year growth in 2024 compared to 2023. The main reasons for this development are the following: European point-to-point carriers are increasingly shifting their fleets and business activities to airports outside of Germany. While in 2019, 190 aircraft of these airlines were stationed in Germany, this number has dropped to currently only 130. This downward trend is due to the steep increases in public charges and fees in Germany such as aviation tax, aviation security fees and flight security fees. These

charges and fees on air travel in Germany have become considerably higher than in most other European countries. German economic hubs have thus lost a considerable amount of their intercontinental and European connectivity, significantly reducing their appeal. At the same time, local air travel within Germany has shrunk considerably since 2019. The passenger demand in the first six months of 2025 was only at 50 percent of its pre-crisis level. Traffic has shifted to rail or road particularly in the case of decentral routes that are not connected to Germany’s main international airports, Frankfurt and Munich, or communication has shifted to digital forms. More than 80 percent of decentral flight connections have disappeared so far.

Tourist travel, in contrast, has continued to trend upwards but only accounts for a small section of the market overall (13%). The demand for air freight has clouded over following a small turnaround in 2024 and has followed a gradual downtrend in the first six months of 2025 (-0.2%), widening the gap to the pre-crisis level of 2019 (-1.2%).

Armed conflicts and insecure supply chains around the world, weak economic momentum in Germany and high public fees and charges for air travel in Germany continues to curb demand. The prospects for the winter season 2025/2026, which runs from November to March, shows a growth in the number of seats available of eight percent compared to the same period last year. In the rest of Europe, the growth rate, starting from a substantially higher recovery level (113% in the rest of Europe compared to 90% in Germany) is at seven percentage points.

Contact: Dirk Helf / Phone: +49 30 5200 77 145 / Mail: dirk.helf@bdl.aero

Machinery manufacturing: Recovery delayed by uncertainty

In the course of 2025 so far, machinery and plant manufacturing in Germany remains under pressure. Production was three percent lower year on year in the first three quarters of the year following price adjustment. Despite registering a positive start to the year, incoming orders in the first three quarters overall were one percent down year on year. Foreign orders from countries outside of the euro area were particularly weak (-5%), while demand from euro area countries proved to be a ray of light, going up ten percent. Domestic orders were downward, falling one percent. The subdued sentiment is still reflected in capacity utilisation, currently at 78.3 percent according to the ifo Institute. Companies still report a shortage of orders as the primary impediment to increasing production. The workforce of the industry has also continued to contract in 2025, but companies are still trying to hold onto their longterm workers given that the shortage of skilled staff is still a structural problem.

The year 2025 overall has so far been marked by a high level of uncertainty. The escalating international trade dispute is burdening companies. The tariff compromise between the United States and the EU has not improved the situation for machinery and plant manufacturing. The additional tariffs on steel and aluminium derivatives and the associated administrative burden as well as the uncertainty of whether tariffs will be extended to include more products in future continues to weigh heavily on the industry. Other international disputes are also making planning certainty more difficult. The sluggish implementation of domestic policy reforms has not delivered a decisive positive impact yet. In view of the current risks, the economists of the German association of machinery manufacturers, the VDMA, expect production to decrease five percent in real terms in 2025 overall.

There are hopes that the situation will improve slightly in 2026. A robust global economy, which the International Monetary Fund (IMF) believes will grow by three percent on average, will provide a solid foundation. Trade policy framework conditions will be a crucial determinant for the industry’s participation in the growing global economy. International cooperation agreements pursued by the EU, with Mercosur countries and India, for example, could help lessen the EU’s dependency on current difficult sales markets such as the United States and China. There are also opportunities for domestic improvements. Structural reform to improve the quality of Germany and Europe as a production location could ease international competitive pressure (particularly from China) and combat the reticence of investors shown in the last few years. Additional public expenditure from the special fund of the federal government could also inject positive momentum to production in machinery and plant manufacturing. At the same time, risks remain. New trade disputes and geopolitical tensions could lead to a further deterioration of framework conditions. In addition, political reforms first need to be implemented in order to unfold their impact. All in all, the economists of the VDMA expect production to increase slightly by around one percent in 2026 compared to 2025.

Contact: Dr. Tilmann Härtl / Phone.: +49 69 6603 1551 / Mail: tilmann.haertl@vdma.org

Nonferrous metal industry: Outlook for 2026 remains subdued

As of October 2025, the situation of the German nonferrous metal industry has been rated as negative for more than two and a half years. Of the companies in the industry surveyed, 43 percent reported too few orders and 17 percent a shortage of staff. Short-time work is set to rise in the next three months from the current low level to 13 percent. In the first six months of 2025, the industry generated revenue of 38 billion euros with a workforce of 101,000 working in around 630 companies. Domestic sales accounted for 48 percent of sales and constituted the industry’s biggest market. The nonferrous metal industry is divided into the following stages of the value chain: production (raw metal), semi-finished products (ribbon, sheets, rods, profiles, pipes and wire), further processing (foil, thin ribbon, tubes, aerosol cans, other cans and powder), casting and hot-dip galvanising. From January to June 2025, aluminium recyclers produced around 1.4 million tonnes of aluminium overall, two percent less year on year. Recyclers are currently struggling with an outflow of aluminium scrap that is of central importance to their industry. This problem has not been resolved by the compromise agreed in the tariff dispute between the EU and the United States. Producers of semi-finished aluminium goods registered a slight recovery with production nudging up one percent up to around 1.2 million tonnes. The production volume in the aluminium further processing segment, in contrast, dropped around seven percent in the first six months of the year compared to the same period last year. In the copper industry, producers of semi-finished and copper alloy products saw production decrease four percent in the first half-year 2025 year on year, down to 755,000 tonnes. The production of lead, zinc, nickel, tin and alloys rose nine percent, up to 250,000 tonnes. In the same period, the output of semi-finished products of zinc, nickel, lead, tin and other nonferrous metals dropped by a marginal one percent year on year down to 69,000 tonnes. The nonferrous metal foundry industry produced 397,000 tonnes of cast parts in the same period, eight percent less than in the first six months of 2024. The continuing low reach of orders in hand in conjunction with the shortage of new orders will keep production throughout the nonferrous metal industry at the current low level or, at best, only slightly higher in 2026.

Foreign trade: US tariffs encumber recovery

Foreign sales of the nonferrous metal industry amounted to 20 billion euros in the first six months of 2025. The proportion of exports rose to 52 percent. Germany has been a net importer not only of ores and concentrates but also of crude metal for many years now. This means that the country imports considerably more crude metal than it exports, reflecting the dependence of German industry on imports from abroad of some raw metals such as aluminium, nickel, zinc, tin and several rare metals On top of the already high US tariffs on aluminium, US tariffs of 50 percent came into effect on 1 August for semi-finished copper products and copper-intensive derivative products. The biggest concern currently is the impeded recovery of the industry’s most important sales market, the EU, as some EU customers are also affected by the US tariffs. Furthermore, there is the danger of exports being diverted into the EU.

Contact: Oliver Eisenberg / Phone: +49 171 2281 340 / Mail: oliver.eisenberg@kupfer.de

Paper and pulp industry: Weak economic momentum in Germany weighs down development

The situation in the German paper and pulp industry remains tense in 2025 as well. Following a slight upward trend the previous year, indicators for the first three quarters of the current year are downward with the volume of production almost reaching its lowest level in ten years. The industry is beset by high costs, weak domestic demand and structural changes in individual segments.

Between January and September 2025, the production of paper, paperboard and cardboard decreased by 3.5 percent down to 14.1 million tonnes compared to the same period last year. The sales volume dropped to 14.2 million tonnes in the first three quarters of 2025. Year on year, this corresponds to a reduction of 2.9 percent. The weak economic momentum in Germany is curbing domestic demand, bringing sales in Germany down 4.1 percent, which is much more pronounced than the downturn in foreign sales, which only dropped 1.7 percent. The revenue of the paper and pulp industry in the first three quarters of the year amounted to 10.9 billion euros overall. That is four percent less than in the same period in 2024, which had already seen a downturn in revenue compared to 2023.

Packaging paper props up overall production while graphic paper battles with structural change

The industry’s largest segment, paper, paperboard and carboard for packaging, registered a stable development in the first three quarters of 2025 on the back of the continuing growth of online trade and the increased demand for sustainable packaging solutions, with production rising one percent year on year. With a volume of 9.5 million tonnes, packaging paper now accounts for around two thirds of the industry’s total production. For this reason, the persistent economic lull is particularly challenging for the paper and pulp industry as the demand for packaging paper is closely correlated to economic development.

Technical and special paper has recorded a slightly downward trend in 2025 so far. Production was down to around one million tonnes, which corresponds to a decrease of 0.7 percent compared to the first three quarters of 2024. Factors driving production down were overall economic development and

international competition. The production of sanitary paper items declined by 3.4 percent between January and September 2025, also dropping to around one million tonnes.

The production of graphic paper continued to fall steeply between January and September 2025, tumbling 17.9 percent year on year, down to only 2.6 million tonnes. Graphic paper is stuck in a profound structural transformation, largely on account of the increasing digitalisation of both media and advertising, and media consumption.

Contact: Dr. Thomas Moldenhauer / Phone: +49 172 2188 501 / Mail: t.moldenhauer@papierindustrie.de

Pharmaceutical industry: Caught between tariffs and upward trend

The German pharmaceutical industry is currently struggling with the burdens of US trade restrictions but is still recording growth. The United States remains the most important individual market for German pharmaceutical producers, accounting for around one quarter of their exports. It is unclear whether the current tariff ceiling of 15 percent will remain in force and what products may be exempted from the tariffs. In parallel, the US government is driving the relocation of pharmaceutical production into the country and the harmonisation of international price differences. This is putting pressure on the globally distributed production of pharmaceuticals and is set to curb investments overall and possibly direct a larger share of investment than previously to the United States.

In spring 2025, many producers tried to outrun the introduction of tariffs by pulling forward activity, triggering a substantial increase in production, revenue and exports in March. Exports to the United States subsequently dropped, while incoming orders from abroad remained stable, indicating a temporary weak phase following the pulled forward production. Currently, many companies are probably catching up with deliveries to other countries that had been postponed so production is only likely to flatten out gradually in the further course of the year. In 2025 overall, production is set to grow solidly, by over three percent despite the tariffs, before dropping off slightly the following year. While domestic sales should increase moderately, the steeper upward trend in foreign sales will be substantially curbed by the US trade restrictions.

The investment activity of the pharmaceutical industry remains dynamic, particularly in research and development. Positive prospects, as also indicated by the corporate survey of the German Chambers of Trade and Commerce and the ifo Institute business climate index, confirm this trend. Although some companies may prioritise investments in the United States, investment levels in Germany remain high. Employment levels in the industry also showed above-average growth. While industry overall is cutting jobs, the pharmaceutical industry is continuing to increase the size of its workforce. With investments high and numerous modernisation projects in the pipeline, a steeper increase in the number of employees is expected in the medium term as new capacities and technologies will require additional skilled workers.

Contact: Dr. Simon Junker / Phone: +49 151 2215 7308 / Mail: s.junker@vfa.de

Steel and metal processing: Production up to and including September two percent lower year on year

The production of steel and metal processors in Germany was 0.7 percent higher in September year on year. This brought total third quarter production up by 0.2 percent compared to the same quarter last year. In the first nine months of the year, however, production was two percent lower. Incoming orders in the year so far were 2.9 percent higher and, in the third quarter, 4.1 percent higher year on year. These positive economic indicators come after an unusually long period of negative developments. Production is still 20 percent below the record level seen in 2018 (based on the periods from January to September). Apart from 2021, the year following the start of the Covid pandemic, development since then has been downward. Production will be downward in 2025 overall as well, which will be the fourth consecutive year of contracting production. This long downward period clearly indicates that structural change is hampering economic development. Companies are adjusting the size of their workforce accordingly. Within the space of one year, 2.6 percent of jobs have been cut, and, since 2019, more than eleven percent, which corresponds to more than 42,500 workers.

Prospects have brightened up since the change of government, but sentiment in the industry remained in recessionary territory in October as well. Although companies were more positive about their prospects going forward, with ratings climbing 3.4 balance points, they were equally less positive about their current situation, with ratings falling by 3.4 points. Only 11.4 percent of companies surveyed rated their current situation as good, with 41 percent of companies seeing their business in troubled waters. The federal government is failing to deliver on industrial policy and on urgently needed reforms in social security. These adverse framework conditions mean that the industry will also not grow next year but stagnate at a low level.

Contact: Holger Ade / Phone: +49 211 9578 6822 / Mail: hade@wsm-net.de

Germany falling further behind as a production location for steel

The downward trend in steel production has continued throughout the current year so far. Production between January and September this year was eleven percent lower than the low volume recorded last year and is currently, projected onto the overall year 2025, at 33.8 million tonnes. This is the fourth consecutive year that production has been below the 40-million tonne threshold. The trend in production has been downward since 2018, apart from an upward blip in 2021. The demand for steel has pointed down since 2017. Up to and including 2024, domestic demand has decreased by around one third, which corresponds to around 15 million tonnes. 2024 was the third consecutive year of downward demand. Although demand stabilised slightly between January and August 2025, (+4% year on year), this mainly constituted an increase in imports and a stocking up of inventories rather than a real increase in demand. Germany has fallen behind other leading steel regions considerably since 2017. In 2024, Germany was on nineth place in the ranking of the world’s top steel markets down from sixth in 2017.

Early indicators are not signalising any improvement yet. Orders from at home and abroad remained on a low level in the first nine months of the year. The ifo business climate index has trended steadily

downwards since 2022. The ifo economic barometer is not showing a clear trend towards recovery either.

Alongside the weak demand among steel-processing industries, the reasons for the industry’s troubles are related to the global environment. The European steel industry has been caught in a deep import crisis for some time now. Continuingly surging steel surplus capacities outside of Europe are further intensifying the crisis. The OECD expects steel surplus capacities to increase by around 20 percent until 2027 up to around 720 million tonnes. That corresponds to more than five times the total EU crude steel production in 2024 (around 130 million tonnes). Capacity is being extended largely in Asia (principally China and India) and the Middle East. In contrast to India and the Middle East, China has experienced flagging domestic demand since 2020. Exports to the EU market have since risen exponentially. Every third tonne of steel used in the EU now originates from outside the EU. The US tariffs and high electricity prices are burdening the industry additionally and will further delay the long-awaited recovery of the European steel industry.

Contact: Bernhard Krischer

The German textile and clothing industry faces another year of crisis

The economic development of the textile and clothing industry has been downward in 2025 so far, both in the textile and the clothing segment. Revenue, production, foreign trade and employment levels are all pointing down. After contracting in 2024, the industry is facing another crisis year in 2025.

The industry’s domestic production has fallen continuously and steadily over the course of this year. Up to and including August, the scale of downward momentum has been almost equally pronounced in both segments, with textiles contracting 5.4 percent and clothing 5.7 percent. The revenue of domestic companies has continued to decrease this year, dropping 2.1 percent overall in nominal terms. Strikingly, after calendar and seasonal adjustment, revenue in both segments has decreased on an equal scale as have domestic and foreign revenue. The contraction in textiles was slightly more pronounced, falling 2.8 percent in nominal terms compared to minus 2.1 percent in clothing.

The industry has now been mired in crisis for at least two years, leading to a wave of insolvencies, particularly in the textile segment in its position as an industrial supplier. At the end of August, there were 7.1 percent less textile producers in Germany than one year ago. The number of clothing enterprises stagnated in the same period. Retails sales among clothing producers are also stagnating, while retail sales overall recorded an increase of 3.5 percent in the first eight months of 2025. Foreign sales could not compensate for the weak domestic demand, with the trade volume falling by 2.3 percent overall up to and including August. Even though the energy and commodity prices have stabilised following the partly exorbitant increases and high volatility, they have stabilised on a high level. Trade disputes are also burdening the industry, with very volatile and partly very high logistics costs, particularly container shipping to and from East Asia, high tariffs and the consequent high level of investment uncertainty. The main negative factor overall, however, is weak domestic and foreign demand.

In the past few months, the short-term prospects have often proved to be more positive than the actual development down the line. This means that hopes for an improvement of the situation have often failed to materialise. Low demand and capacity utilisation remain the fundamental problem. Foreign buyers, particularly in countries outside of Europe that are important to the industry, have not been able to close the gap in demand. Rising personnel costs are also a larger concern for companies in the textile and clothing industry this year than they were last year.

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 1 December 2025