German engineering production rises at the start of 2023 - VDMA

BERLIN (Reuters) - Production in Germany's engineering sector rose by 3.2% in the first two months of 2023 compared with the same months last year as supply chain bottlenecks eased considerably, the VDMA engineering association said on Monday.

Despite a solid start to the year, VDMA stuck to its full-year forecast for a 2% drop in production compared with last year.

"The currently slightly improved economic environment will only be reflected in incoming orders and sales in the industry with a time lag," VDMA head Karl Haeusgen said in a statement.

German engineering companies' order books shrank by 17% in January and February, VDMA said, citing a global economic slowdown clouding investors' sentiment.

The shortage of skilled workers is currently the biggest challenge for the industry, which employed 1.018 million people at the end of 2022.

"Many companies would have liked to hire more staff but are being held back by the bottlenecks in the labour market," Haeusgen said.

(Reporting by Tom Kaeckenhoff and Riham Alkousaa; Editing by Hugh Lawson)