German manufacturing PMI falls in August ’24

Germany’s manufacturing sector faced intensified challenges in August 2024, according to the latest HCOB PMI data. The manufacturing PMI fell to 42.4, down from 43.2 in July, marking the lowest reading since March. The index has been in contraction territory for three consecutive months.

New orders plummeted sharply, showing the steepest decline since November 2023, with new export orders also falling significantly, the most substantial drop in nine months.

Production volumes decreased at a rate that, while slightly slower than July, remained among the fastest declines in six months.

Employment and backlogs of work saw accelerated reductions, with employment falling at its quickest pace in five months. Purchasing activity also decreased notably, with the largest drop in ten months. Pre-production inventories fell sharply, though finished goods inventories saw a modest reduction.

Input prices rose only marginally, the slowest rate since February 2023, while factory gate charges showed the smallest decrease in 15 months. Business sentiment weakened, with expectations for growth hitting the lowest level since March.

Dr. Cyrus de la Rubia of Hamburg Commercial Bank noted that the extended downturn in Germany’s manufacturing sector, now ongoing since mid-2022, contrasts with historical recoveries.

He attributed the persistent slump partly to increased competition from China and ongoing issues in the global economic cycle.