German engineering body sees fall in 2025 production, flags risk of job cuts

(Reuters) - Germany's VDMA engineering association said on Tuesday it still expected production in the sector to fall next year, although at a slower pace than in 2024, and flagged the risk of slight job cuts as sinking orders have hindered capacity utilization.

The VDMA said it anticipated production would decline by 8% and 2% in real terms in 2024 and 2025 respectively, unchanged from its previous forecast, as it warned of intensifying competition in China and new challenges in the U.S. from Trump's presidency.

"A growing number of companies is no longer able to adequately cushion production through their order backlogs in the face of sharply declining orders," VDMA President Bertram Kawlath said in a statement.

Kawlath added that falling interest rates are likely to benefit consumption as well as boost investment and trigger an economic recovery next year, but that he expected no dramatic upturn as conflicts, protectionism and structural breaks weigh on global economy.

(Reporting by Tom Kaeckenhoff, writing by Linda Pasquini, editing by Madeline Chambers)