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Germany’s manufacturing sector sees notable contraction last month
(MENAFN) Germany's manufacturing sector saw a more pronounced contraction in August, marked by a sharp decline in new orders and weakened demand, particularly within the construction industry. According to the Purchasing Managers' Index (PMI) data released on Monday, the Hamburg Commercial bank (HCOB) reported that Germany’s manufacturing PMI fell to a five-month low of 42.8 in August, down from 43.2 in July.
This decrease in the PMI reflects lower production volumes and a reduction in employment, suggesting that factories are operating with excess capacity. While the rate of contraction showed a slight easing from the previous month, it remains considerable and indicates ongoing challenges in the sector.
The persistent weak demand has resulted in shortened delivery times for inputs for the 22nd consecutive month. At the same time, shipping costs have risen, although overall input prices have decreased. These trends highlight ongoing difficulties in managing production and supply chain costs amid a challenging economic environment.
Cyrus de la Rubia, chief economist at HCOB, noted that the current situation deviates from historical patterns. Typically, the industry recovers within a maximum of 20 months after a recession begins, but this time the recovery is uncertain. He pointed to intensified competition from China, particularly impacting German industrial sectors like automotive and mechanical engineering, as a major factor contributing to the sector's struggles.
This decrease in the PMI reflects lower production volumes and a reduction in employment, suggesting that factories are operating with excess capacity. While the rate of contraction showed a slight easing from the previous month, it remains considerable and indicates ongoing challenges in the sector.
The persistent weak demand has resulted in shortened delivery times for inputs for the 22nd consecutive month. At the same time, shipping costs have risen, although overall input prices have decreased. These trends highlight ongoing difficulties in managing production and supply chain costs amid a challenging economic environment.
Cyrus de la Rubia, chief economist at HCOB, noted that the current situation deviates from historical patterns. Typically, the industry recovers within a maximum of 20 months after a recession begins, but this time the recovery is uncertain. He pointed to intensified competition from China, particularly impacting German industrial sectors like automotive and mechanical engineering, as a major factor contributing to the sector's struggles.
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