The German manufacturing downturn deepens in October with a faster decline in both new orders and output being noted. The only consolation is that inflation pressures have cooled a little but are still staying elevated. S&P Global notes that:
“October’s PMI showed business conditions across the manufacturing sector becoming more and more difficult, with no quick turnaround in sight.
“There was further downward pressure on output levels at the start of the fourth quarter, with firms noting the influence of high energy costs and a deepening downturn in demand.
“Manufacturers are gravely concerned about the outlook for the next 12 months, with expectations having fallen to their lowest since the initial COVID wave.
“Despite the gloomy outlook, factory employment continued to show resilience. The gap between the survey’s employment and business expectations indexes is by far the widest since the latter’s inception ten years ago. Given the scarcity of available skilled staff, it seems goods producers are keen to retain what talent they already have despite worsening business conditions.
“Inflationary pressures in the manufacturing showed signs of easing in October but remained historically elevated. Falling demand for inputs and an associated easing of supply-chain constraints helped the rate of input cost inflation resume its recent decline following the brief energy-driven upturn in September. Input costs rose at the slowest rate since January 2021, but nevertheless one that has rarely been exceeded prior to this. High energy costs have prevented producer price inflation from falling more quickly.”