- Final Manufacturing PMI 40.6 vs. 40.3 expected and 42.4 prior.
Key findings:
- HCOB Germany Manufacturing PMI at 40.6 (Aug: 42.4). 12-month low.
- HCOB Germany Manufacturing PMI Output Index at 41.3 (Aug: 42.8). 11-month low.
- Expectations turn negative as confidence deteriorates sharply.
Comment:
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
"These figures are adding fuel to the debate around deindustrialisation. With orders drying up at an alarming rate, it is hard to picture any kind of recovery happening soon. What is particularly troubling, looking back over the last 30 years, is how long this slump in export orders has dragged on – it is unprecedented.
We attribute this to the “China shock”. Many companies, especially in the automotive and mechanical engineering sectors, have not yet found convincing answers to the sudden intensification of competition. Data showed the steepest decline in new orders since October 2023, with the downturn being widespread across intermediate, capital and consumer goods sectors. This aligns with the broader observation that global demand for manufactured goods remains under pressure.
For over a year-and-a-half, companies have been running down their inventories of intermediate inputs. Normally, you would expect them to start restocking at some point, but instead, in September, they slashed inventories even more than we have seen in this current cycle. It highlights how pessimistic manufacturers are feeling.
On the bright side, the significant drop in oil and natural gas prices – down around 7% in September compared to the previous month – is giving companies some breathing room. Lower energy costs have helped push purchase prices down much faster than sales prices, which in turn is good for profit margins. So, at least on that front, there’s some relief."
