Germany's manufacturing activity contracts most in over 3 years

ANKARA

Germany's manufacturing sector contracted the most in over three years owing to a sustained deterioration in new orders, according to a survey released on Monday by the US-based financial services company S&P Global.

The Hamburg Commercial Bank (HCOB) Manufacturing PMI for Germany plunged to 40.6 in June, below the flash estimate of 41 and down from 43.2 in May.

Manufacturing companies cut their production levels at the fastest pace in eight months due to persistently weak demand.

Goods producers saw a decline in output prices for the first time since Sept. 2020, reflecting a deepening decline in input costs and growing competitive pressures, the data showed.

Manufacturers were increasingly pessimistic about the coming year amid sticky inflation, tightening financial conditions, customer uncertainty, and geopolitical tensions.

Factory employment growth eased to a crawl in June, led by a cut in demand and a deteriorating outlook.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, stressed that the PMI data showed that a recession in the manufacturing sector has become much more likely.

"However, the signs are still pointing more to a mild downturn and the survey results therefore by no means suggest panic among companies," Rubia added.