Germany's manufacturing sector experienced its sharpest decline in activity in September, with the HCOB Germany Manufacturing Purchasing Managers' Index (PMI) falling to 40.6 from 42.4 in August. This marks the fourth consecutive month of slowdown and the lowest reading in 12 months, according to a survey by S&P Global.
The figures are fueling concerns about deindustrialization, with new orders, export sales, and employment all showing significant decreases. New orders saw the steepest decline since October last year, while export sales posted the sharpest drop in 11 months. Workforce retrenchment also accelerated, leading to the steepest contraction in factory employment in over four years.
Business confidence has deteriorated sharply, turning negative for the first time in seven months. More than one-third of surveyed firms expect a decline in output over the next 12 months, citing weaker demand, geopolitical uncertainty, and troubles in the automotive sector.
This data suggests a challenging environment for Germany's manufacturing sector, with implications for the overall economy. Investors and market participants should closely monitor these developments and consider adjusting their portfolios accordingly.