Germany’s manufacturing sector showed stronger growth in March, but rising costs and supply disruptions linked to the Middle East conflict created fresh challenges, according to the latest PMI survey.
The Manufacturing PMI rose to 52.2 from 50.9 in February, marking the highest level since May 2022. Output and new orders both increased at a faster pace, supported by higher demand. Some businesses reported a rise in orders as customers built inventories to avoid future supply disruptions and price increases.
However, supply chains came under pressure. Delivery times lengthened significantly, mainly due to delays in shipments from Asia. This was the sharpest deterioration since July 2022.
Cost pressures also intensified. Input prices rose at the fastest pace since October 2022, driven by higher energy, transport, and raw material costs. Companies passed some of these increases on to customers, with selling prices rising at the quickest rate in over three years.
Despite stronger output, employment declined further, with job cuts accelerating in March. At the same time, backlogs of work increased, indicating growing pressure on capacity.
Looking ahead, business confidence weakened sharply to its lowest level since November, as firms expressed concerns over rising costs and ongoing uncertainty related to the Middle East conflict.