Germany’s manufacturing sector ended 2024 on a sour note, with sharper drops in both output and new orders, signaling continued struggles for the industrial backbone of Europe’s largest economy, a survey showed on Thursday.
The HCOB Germany Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 42.5 in December from 43.0 in October and November, confirming a preliminary flash estimate.
“The situation in the manufacturing sector is still pretty grim,” said Hamburg Commercial Bank chief economist Cyrus de la Rubia.
Production is on a steep decline, and new orders keep slumping, making it clear that the industry won’t be coming out of recession anytime soon,” he added.
Reports also suggest that the intermediate goods category, in particular, saw its steepest decline in a year which could also impact the investment goods sector.
The chief economist also suggested that the downward trend in business conditions could reverse in the second half of 2025 and is tied to the anticipated formation of a new government following Germany’s February elections, which could ease caution around investment and consumption.
The index for future production is barely above 50, suggesting that companies expect to produce only slightly more in a year than they do today.