German manufacturing activity contracts deeper in August

ISTANBUL

Germany's manufacturing sector experienced a deeper contraction in August, with new orders falling sharply and demand weakening, particularly in the construction sector, according to Purchasing Managers' Index (PMI) data released on Monday.

The Hamburg Commercial Bank (HCOB) survey reported that Germany’s manufacturing PMI dropped to a five-month low of 42.8 in August, down from 43.2 in July.

The decline in PMI reflects reduced production volumes and a drop in employment, indicating excess capacity at factories. Although the rate of contraction eased slightly compared to the previous month, it remains significant.

Weak demand led to shortened delivery times for inputs for the 22nd consecutive month. Meanwhile, shipping costs increased while overall input prices decreased.

Cyrus de la Rubia, chief economist at HCOB, commented on the situation: “Normally, over the last 30 years, the industry has managed to recover within a maximum of 20 months after a recession begins. This time, however, is different. China appears to be a major factor, intensifying competition with German industrial companies, particularly in the automotive and mechanical engineering sectors.”