EMI: Downturn of German industry eases further in November

The downward trend in German industry appears to be weakening. This is signalled by the results of the HCOB Purchasing Managers' Index (EMI) survey conducted by S&P Global. According to the survey, both production and incoming orders fell in November at the lowest rate in six months. On the negative side, however, companies' business outlook remained pessimistic overall despite a slight improvement.

According to the US financial services provider, the EMI rose for the fourth time in a row in the month under review and currently stands at 42.6 points after 40.8 in October. Nevertheless, it is still well below the reference line of 50.0.

"The EMI is becoming a real waiting game. After all, it has remained below the 50-point growth threshold since June 2022. Following the negative trend, which has now lasted 18 months, the question of where the impetus for the upturn in German industry will come from is becoming increasingly important, emphasised BME Managing Director Dr Helena Melnikov.

This is because the global economy is also continuing to weaken, putting a strain on German foreign trade. "At the same time, there are also home-made domestic political problems such as the budget crisis for which the coalition government is responsible. The judgement of the Federal Constitutional Court is likely to halt firmly planned government investments and put additional pressure on the manufacturing industry in particular. All in all, the outlook for the rest of the financial year and beyond is not good," concluded Ms Melnikov.

"There are signs of a turnaround in German industry. The EMI has recently risen again - as it has in many other countries," commented Dr Gertrud R. Traud, Chief Economist at Helaba Landesbank Hessen-Thüringen, in response to a BME enquiry about the latest EMI data. The fall in energy prices is also an important relief for German industry. After stagnating, German GDP will grow again in 2024. "We expect an increase of 1.3 per cent," added the Helaba bank director in her statement for the BME.

"Light and shadow are close together for the German economy. There are justified hopes that the economic trough will be reached in the fourth quarter. At the same time, the economic risks are increasing significantly due to the budget crisis following the constitutional court judgement. Whether the economic turnaround can really take place will ultimately also depend on the course set by politicians," Dr Ulrich Kater, Chief Economist at DekaBank, told BME.

"The outlook for industry remains pessimistic. A rapid and strong upturn is not to be expected for the time being. A cocktail of high interest rates, persistently high energy prices, bureaucracy, a shortage of skilled labour and weakening demand is weighing on companies. In addition, the judgement of the Federal Constitutional Court on budgetary policy and its consequences are currently increasing uncertainty among companies. At least there is a faint glimmer of hope in the further decline in inflation and producer prices," DIHK economic expert Jupp Zenzen told the BME.

Source: BME, Photo: Fotolia