We introduced the Recession Heatmap in 2019 to help industrial businesses assess the likelihood of a recession in their respective sectors. Our Lead Indicator has the potential to signal a looming recession as early as three to four quarters before it hits.

During 2023, our Lead Indicator switched back to green again, indicating that the industry should start recovering from Q2 2024. The current decline in demand can be attributed to multiple factors, including the normalization of growth rates after the post-COVID, weak demand in Europe and China, and supply chain crisis rebound. Additionally, the increased interest rates are particularly affecting the industrial goods industry, with sectors heavily dependent on the construction industry being especially impacted.

However, it is important to note that while the Lead Indicator indicates only a temporary softness rather than a prolonged crisis, there is still a high level of uncertainty regarding the sector development throughout the current year. There are some promising factors, such as the potential decline in interest rates or the likelihood of a recovery in the Chinese economy. However, other factors like global economic conditions, geopolitical tensions, elections, and potential supply chain disruptions could also have an impact on the trajectory of the Industrial Goods sector in 2024. Therefore, it is crucial for businesses to remain vigilant and adapt their strategies accordingly to navigate the uncertainties that lie ahead.

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. Come back and visit the Recession Heatmap whenever economic uncertainty is growing.