Germany September final manufacturing PMI 39.6 vs 39.8 prelim

<ul><li>Prior 39.1</li></ul><p>German manufacturing stays more subdued towards the end of Q3, as deteriorating demand conditions continue to weigh. This saw the sharpest decline in output since May 2020 but at least input costs are seen falling further. HCOB notes that:</p><p>“There are tentative signs that the bottom is in sight. For sure, the HCOB Manufacturing PMI of Germany is still signalling a
quick slide downhill in terms of output. Nevertheless, we see glimmers of hope that the sector is starting to turn the corner.
Take new orders for instance, they are on the decline, but easing up a bit. And it is a similar situation with export orders.
</p><p>"In terms of new orders, history tells us an encouraging story. In past phases of weak growth or recessions, the new orders
index stayed in contractionary territory for less than two years. Then, the index moved above 50, signalling growth again. As
of today, the new orders index has been below 50 for 18 months. Therefore, there is a decent shot that the order situation
will start to improve by the start of next year.
</p><p>"Suppliers’ delivery times continue to improve at a rather fast pace. This is a sign that demand is still deteriorating, but also
that supply problems have been removed. The latter is an important prerequisite for growth to pick up again once demand
conditions allow for it.
</p><p>"Compared to previous recessionary phases, the job market is dancing to a different beat now. It's like firms are just
tiptoeing around job cuts. During the recessions at the start of the century, in 2008/2009 and during the eurozone debt crisis,
jobs always took a nosedive. Today, demographics and the corresponding labour shortages, even in times of weak demand,
are the obvious reasons why we are not seeing the job losses of times gone by. These factors change the character of this
recession, which we assume to have started in the third quarter.
</p><p>"Breaking it down by sector, the output drop is widespread. Consumer and investment goods production are dropping at
faster rates, while the decline in intermediate goods output is easing up a touch. When it comes to jobs, the intermediate
goods sector is looking the gloomiest. But in the world of consumer and investment goods, they're holding the line, keeping
jobs steady."</p>

This article was written by Justin Low at www.forexlive.com.