German manufacturing faces fresh setback – PMI

Germany’s manufacturing sector faced a renewed setback in June, with output and new orders declining at an accelerated pace, according to a survey released on Monday.

The final Purchasing Managers’ Index (PMI) for German manufacturing fell to 43.5 in June from 45.4 in May, aligning with earlier estimates and remaining below the pivotal 50 level that distinguishes growth from contraction.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank (HCOB), commented on the challenges, noting that the sharper drop in new and export orders suggests a prolonged recovery period for the sector.

He attributed part of the struggle to increased global competition from China, which has intensified its export efforts amid sluggish domestic demand.

Despite these hurdles, there is a glimmer of optimism among German manufacturers, with sentiment reaching its highest level since February 2022. Companies expressed hopes for a rebound in exports, boosted investment, and overall economic improvement over the next year.

The survey also highlighted continued downward pressure on input costs and factory gate charges due to weakened demand, although the rate of decline moderated slightly compared to previous months.

Attribution: Reuters, Hamburg Commercial Bank (HCOB).