At the moment, incoming orders and earnings in the European and German mechanical and plant engineering sectors are strong. However, there are indicators that point towards the situation changing in the near future.
The Oliver Wyman Lead Indicator can point to a possible downturn with a lead time of four quarters. An example that makes this evident is the year 2008 on our Recession Heatmap. In the last quarter of 2018, this Lead Indicator turned red again. If this continues, it is highly likely that the German mechanical and plant engineering industry will experience another recession in the second half of 2019.
The good news is that today – at the beginning of the second quarter of 2019 – the order backlog in the manufacturing industry is still stable. This provides sufficient time for companies to position themselves accordingly before the onset of a possible recession. Preparing and implementing appropriate strategies for optimization or transformation for different recession scenarios will be key.
Click through the Recession Heatmap to view the indicators and the economic situation of the different mechanical engineering segments in Germany and the EU from 2006 until today.