- Prior 46.3
Overall activity continues to decline in Germany's manufacturing sector despite some improvement in output and supplier performance. The less positive development is that demand conditions remain under pressure and that is weighing on new orders. S&P Global notes that:
"The headline PMI pointed to a deepening downturn in the manufacturing sector in March, but, having been heavily influence by the supplier delivery times sub-index, it masked a second successive, albeit slight, uptick in production levels during the month. Falling input costs were another plus-point, with lower pipeline price pressures a welcome development for inflation , although this is in large part a symptom of cooling demand.
"There are clear signs of disinflationary forces taking hold in the manufacturing sector, with input costs falling for the second month running and at the quickest rate since May 2020. Furthermore, a sharp slowdown in factory gate price inflation to a 26-month low shows that more and more manufacturers are losing pricing power, particularly producers of intermediate goods who are exposed to a decline in demand for inputs.
"We're seeing a general preference for lower buffer stocks now that lead times on materials and parts have greatly improved. The decrease in supply-chain pressures is self-fulfilling, as quicker delivery times prompts attempts to unwind excess stocks, which in turn leads to lower input demand. "Confidence among manufacturers towards the year ahead generally remained subdued in March, amid continued concerns towards future demand. However, underlying data showed that investment goods producers were more optimistic than most, having seen some promising signs on the order book front and an upswing in output."
