BERLIN (Reuters) – The slowdown in Germany’s manufacturing sector continued in September due to weak demand and a rapid decline in production, show final results of the S&P Global/HCOB monthly survey released on Monday .
The final purchasing managers’ index (PMI) for the manufacturing sector, which represents around a fifth of the German economy, came in at 39.6 in September compared to 39.8 in the first estimate. In August it was at 39.1.
The 50 mark separates growth and contraction in activity.
Production fell at its fastest rate since May 2020, during which global activity was paralyzed by the COVID-19 pandemic. It was notably affected by a new marked drop in new orders, according to the S&P survey.
Demand is suffering from uncertainties regarding consumer intentions and weak construction activity.
The decline in demand, however, translated into a fall in prices, with September being marked by further reductions in input costs and production costs, according to the survey.
“Germany’s HCOB manufacturing PMI still signals a rapid decline in terms of output. Nonetheless, we see glimmers of hope that the sector is starting to turn a corner,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank (HCOB).
According to Cyrus de la Rubia, during past phases of low growth or recession, the new orders index remained in contraction for less than two years before returning above 50.
“To date, the new orders index has been below 50 for 18 months. Therefore, there is a good chance that the order situation will start to improve by the beginning of next year,” did he declare.
(Reporting Maria Martinez; French version Claude Chendjou, editing by Kate Entringer)
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