German Factory Slump Eases in July

The S&P Global Germany Manufacturing PMI was confirmed at 54.2 in October 2026, the second-highest for almost four-and-a-half years, just behind August's recent peak, and compared to 53.9 in September. The reading pointed to sustained solid growth in production levels, supported by rising export sales. Factory employment meanwhile came even closer to stabilising, registering its smallest fall in over three years, amid further signs of capacity pressures building. However, coinciding with a jump in the rate of input price inflation to the highest since May and a worsening of supply delays, the latest data showed a reduction in manufacturers' expectations for output growth in the coming year and a build-up of buffer stocks of inputs.

Germany’s Manufacturing PMI rose to 54.2 in October 2026 from 53.9 in September, exceeding market expectations of 53.5, preliminary estimates showed. This marked a two-month high and signalled a continued improvement in manufacturing business conditions. However, manufacturing output growth eased, with the output index falling to 55.1 from 56.0, its lowest level in three months. Order books continued to expand, albeit at a slower pace, supported by sustained growth in export sales, while manufacturing backlogs recorded another robust rise. Meanwhile, employment edged closer to stabilisation, with job losses slowing to their weakest pace in over three years. On the price front, input-cost inflation accelerated for a second consecutive month to its highest level since May, driven by higher oil prices and rising raw material and component costs. Looking ahead, manufacturers’ business confidence weakened to its lowest level since July amid growing concerns over rising input prices.

The S&P Global Germany Manufacturing PMI was revised slightly higher to 53.9 in September 2026 from a preliminary of 53.8, pointing to a slowdown from 54.3 in August which was the highest since May 2022. Still, the data showed sustained strong growth in both production levels and new orders. Also, goods producers were increasingly optimistic about the upturn continuing in the coming year, with expectations recovering to their highest since February. This was despite manufacturers facing not only a revival in inflationary pressures linked to increased energy prices, but also continued widespread supply delays. Meanwhile, there were signs of growing pressure on operating capacity at factories, as underlined by a marked and accelerated increase in backlogged orders, the steepest since April 2022. Accordingly, firms showed greater restraint on the job cutting front, with employment falling only marginally and at the slowest rate for three years in September.