- Prior 48.2
The headline reading is a 10-month low as a drop in demand conditions sees German manufacturing activity slump in the final month of last year. Of note, manufacturing output slid into contraction territory for the first time in ten months amid falling export sales. And that led to deeper cuts to employment, purchasing and stocks of inputs.
Meanwhile, price pressures remain sticky as goods producers reported a rise in average input prices for the first time in almost three years in December. And panel members also noted that metals were a key driver of cost inflation. So, that's something to take note of at least. HCOB comments that:
“Manufacturing had shown hints of recovery earlier in 2025, but the downturn has deepened again in December, driven by investment and consumer goods. The headline PMI index has slipped to its lowest point since last February. The sharp decline in export orders, which have now fallen for the fifth month in a row, points to a very weak start to 2026.
“In December, industry was affected not only by weak demand and falling sales prices, but also by rising input prices, which came as a surprise. Over the past few months, these prices had shown signs of stabilising, but an increase is something that has not happened for almost three years. This increase could be due to the higher prices of industrial metals such as copper and tin, which were more expensive in euro terms both compared to the month before and a year ago.
“Inventories of purchased goods have fallen at an accelerated pace over the past three months. With orders drying up, companies also want to save on inventories and are reducing them. Stocks of inputs have been falling since the beginning of 2023, which is unusually long, and developments over the past three months give no hope for a turnaround anytime soon.
“Staff reductions continued almost unabated in December. Lower investment and cost-saving measures likely drove that trend. The accelerated depreciation option, which has been available since last July, has obviously not yet had any visible effect. With the start of government-backed infrastructure projects and the booming demand for defence equipment, things could look different in 2026. In fact, more companies now expect higher production a year from now.”
