German Manufacturing Expands for First Time Since 2022

Germany’s S&P Global Manufacturing PMI fell to 49.9 in May 2026 from 51.4 in April, below market expectations of 51.0, preliminary data showed. The reading signals contraction in the manufacturing sector, its weakest performance in four months, as the Middle East war-related boost from stock-building and efforts to preempt price hikes and supply shortages fades. Factory output rose only fractionally, marking the weakest growth in the sequence that began at the start of the year, while new orders declined for the first time since December. Customer hesitancy, driven by economic and geopolitical uncertainty and reduced spending power from rising prices, weighed on demand. Employment fell at a faster pace amid an accelerated reduction in backlogs. Input cost inflation accelerated, with firms reporting higher expenses for commodities, energy, fuel, and transportation, exacerbated by supply shortages. Finally, business confidence edged higher but remained subdued.

The S&P Global Germany Manufacturing PMI was revised slightly higher to 51.4 in April 2026 from a preliminary of 51.2, compared to a 46-month high of 52.2 in March. Germany's manufacturing sector saw further growth in both output and new orders, as well as longer supplier delivery times. However, goods producers expected the fallout from the war in the Middle East to eventually lead to lower production in the coming months. The darkening business outlook reflected concerns about the impact of rising inflation, supply chain disruption and elevated uncertainty. April saw manufacturing input costs increase at the fastest rate in over three-and-a-half years, while reports of supply delays reached a level not seen since mid-2022.

The S&P Global Germany Manufacturing PMI fell to 51.2 in April 2026 from 52.2 in the prior month, broadly in line with forecasts of 51.3, according to flash estimates. The data pointed to a slowdown in manufacturing activity following a solid expansion in March, which was strongest pace since May 2022. Both output and new orders decelerated sharply as geopolitical uncertainty dampened demand and led to greater customer reluctance. Employment fell once again, coinciding with a reduction in backlogs of work. Meanwhile, supplier performance deteriorated at its fastest pace since mid-2022. On the price front, higher prices for materials such as metals and plastics resulted in very strong cost pressures, the highest in the sector for over three-and-a-half years. Output charge inflation hit a 39-month high, as businesses tried to pass some of the higher costs on to clients. The outlook for the year ahead turned pessimistic amid heightened uncertainty, rising prices, and supply issues.