- Final Manufacturing PMI 45.4 vs.45.4 expected and 42.5 prior.
Key findings:
- HCOB Germany Manufacturing PMI at 45.4 (April: 42.5). 4-month high.
- HCOB Germany Manufacturing PMI Output Index at 48.9 (April: 45.4). 13-month high.
- Business expectations improve once again.
Comment:
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
"Finally, there is light at the end of the tunnel. With the global manufacturing environment having already improved in recent months, the spark now seems to be catching on with German producers. The output index made a significant leap towards the 50 no-change mark in May, indicating that companies have barely reduced their production on average. This is a stark contrast to the previous twelve months, which saw consistent and substantial declines in output."
"While not yet at an ideal point, there are signs of a turnaround. New orders are still declining, but it looks like we could see an increase in demand in the coming months after more than two years of drought. The new orders index jumped six points, indicating a potential catch-up. This aligns with the accelerated decline in inventory levels, suggesting that many companies may have underestimated demand and had to dip into their stocks of finished products and intermediate goods."
"Demand is still weak, but there are tentative signs of stability. Companies reduced their purchases of intermediate goods, but to a lesser extent than they did over the previous 19 months. Additionally, the fact that delivery times are not shortening as quickly as in the previous two months suggests a less severe demand situation. Optimism among companies has significantly increased, reaching its highest level since February 2022.
""The economic turnaround is most evident in intermediate goods. The relevant PMI has risen for the third consecutive time and is just below the expansion threshold. In capital goods, the index saw a particularly sharp rise in May, but a bit of caution is advised in interpreting this monthly movement given the downward trend in previous months. The consumer goods sector shows few signs of revival, with conditions deteriorating at a similar fast rate as the last two months. Overall, positive trends are emerging in the crucial sectors of capital and intermediate goods, supporting the expectation of a return to growth in the near future."
