German manufacturers reported the strongest production growth in three-and-a-half years in September, according to the latest HCOB PMI survey. However, the survey's more forward-looking indicators weakened, with business expectations for the year ahead sinking to the lowest in nine months and firms facing a renewed decline in intakes of new work.
On the supply side, the latest data showed the first increase in average delivery times for inputs in almost three years. That was despite firms scaling back their purchasing activity, which had in turn contributed to further downward pressure on input costs.
The headline HCOB Germany Manufacturing PMI came in at 49.5 in September, showing a slight decline from August's 38-month high of 49.8. The fall in the headline index reflected negative developments in new orders and employment; however, the three remaining sub-components all had a positive directional influence, including output.
September saw production rise for the seventh month in a row and at the quickest rate since March 2022.
Inflows of new work were down across the German manufacturing sector for the first time in four months in September.
Factory employment levels decreased further at the end of the third quarter, continuing a protracted sequence of staff retrenchment stretching back to mid-2023.
German manufacturers also scaled back their purchasing activity in September, the second month in a row in which this has been the case. Prices paid for purchases meanwhile continued to fall during September.
Looking ahead, business expectations for output over the next 12 months fell to their lowest so far this year.