Germany’s machine tool builders saw production volume decrease for the first time in three years, according to a summary report by the German Machine Tool Builders’ Assn. (VDW). The trade association noted a 1% decline in production, which totaled €14.4 billion ($16.4 billion) for the largest machine-tool building industry in Europe. VDW noted that even the decreased amount represented the second-highest level of production ever for the sector.

The German industry also is one of the largest machine-tool building industries in the world (17.7% global market share, ranking third behind Japan and China), and one of the largest manufacturing sectors for the German economy.

Like its counterpart industries in the U.S. and Italy, the German machine tool industry’s new orders increased by an impressive level in the fourth quarter of 2015 — up 15% compared to the same period of 2013. Foreign orders rose by 24%, though domestic orders declined 1% versus Q4 2013.

For 2014 as a whole, VDW members’ new orders increased 4%, while domestic orders increased 6% per cent.

In 2014, VDW members’ exports represented 67% of all shipments, but fell 3% for the year to €8.9 billion ($10.13 billion) in 2014. Exports were destined mainly for other European markets, increasing 1% within the EU. Exports to the Americas and to Asia declined, however.

VDW members’ order backlog averaged 7.3 months throughout 2014, slightly down from the 2013 figure, and their capacity utilization rate continued to be quite high, averaging 90.1% over the year.

In its 2015 forecast, VDW said it anticipates a 3% rise in output. “The low oil price and the fall in the euro’s exchange rate are invigorating capital investment and thus also increasing the demand for machine tools,” stated Martin Kapp, VDW chairman, speaking at the organization’s annual press conference in Frankfurt last week.

The outlook is based on economic analysis supplied by Oxford Economics, which forecasts improved global business conditions during 2015 — notably in manufacturing sectors that will reward machine tool suppliers with higher demand for their products. For example, VDW pointed out the forecast expansion in the German automaking and the mechanical engineering sectors (which together buy about 70% of machine tools produced.)

VDW also itemized “reindustrialization” in the U.S. market, extending machine tool demand beyond the traditional automotive and aircraft markets; and it noted rising orders from Eastern Europe (where Russian demand was notably impaired during 2014) and Italy (where changes in business investment regulations have spurred sustained demand), as well as continued strong continuing solid demand by Swiss manufacturers. The latter factors are expected to guide a moderate recovery in European demand for German machine tools in 2015.

“We are cautiously optimistic about the ongoing year, since the German machine tool industry is in good shape, as a vendor of production equipment for the entire world,” according to Kapp.