Metal and Electrical Industries (M+E) Economic Survey for Bavaria – Summer 2025

The economic situation in the Bavarian metal and electrical industries remains poor, although companies' confidence in future developments is increasing. These are the findings of our latest economic survey, which covered 193 bayme vbm member companies with a total of 247,000 employees. bayme vbm is the employers’ organization for the Metalworking and Electrical Industries (M+E) in Bavaria.

Current business situation and expectations

On balance, companies continue to rate the economic situation negatively, albeit less poorly than six months ago. For domestic business, the balance of positive and negative answers is -7.5 percentage points, while for foreign business it is -1.3 points. In the December 2024 survey, the balances were significantly lower at -29.4 and -28.2 points respectively.

Companies’ expectations for the coming months are predominantly optimistic. For domestic business, 36 percent of companies expect an improvement, while just under seven percent fear a deterioration. Companies are not quite as confident when it comes to exports. A good quarter of companies are hoping for a recovery, while 7.5 percent expect a further deterioration.

Production and Investment plans

The production plans of M+E companies at their domestic locations are slightly positive for the first time in two years. 16.5 percent of companies intend to increase output in the coming months, while twelve percent will have to reduce production. Production plans at foreign locations have also increased and thus remain significantly more expansive than in Germany.

By contrast, the investment plans of M+E companies in Germany remain negative, even though they have improved compared to the last survey. The balance of positive and negative plans rose from -30.4 to -8.3 points. Of the planned investments, only a good 17 percent relate to expansion measures, with replacement purchases accounting for the majority at 30 percent.

Earnings Situation

The earnings situation remains very critical. Similar to last year, almost a fifth of companies fear that they will make losses. Overall, almost 44 percent of M+E companies are in the critical range below a net return on sales of two percent. Just under 34 percent expect a return on sales of four percent or more; compared to 42.5 percent in 2024.

Employment plans

Domestic employment plans are less negative than in the December survey, but on balance they remain in the red. 13 percent of companies want to create additional jobs in the second half of the year, while almost 24 percent fear they will

have to cut jobs. This proportion has almost halved. At the foreign locations, the employment plans of Bavarian M+E companies have fallen and are now just in negative territory.

The shortage of workers and skilled workers is becoming increasingly heterogeneous. Compared to the December survey, the proportion of companies that see their production activities “significantly” impaired by a lack of workers has risen from 10.6 to 17.5 percent. At the same time, however, the proportion of companies whose business is not affected has also increased: from 44.7 to 53.0 percent. 29.5 percent report a “minor” impairment.

US Tariff Policy

US President Trump's trade and tariff policy is weighing on the Bavarian M+E industry. In the survey, 56 percent of companies stated that they export to the United States. More than half of these had already been specifically affected by the tariff increases. Overall, two thirds of the affected companies reported negative reactions from their customers, who reduced, postponed or even canceled orders.

Not only exporters are negatively affected, a large majority of companies with locations in the US also report negative consequences of US trade policy. The agreement that has now been reached between the EU and the US does not fundamentally change this.