German Manufacturing Sector Weakens

The S&P Global Flash Germany Manufacturing PMI slipped to 50 in June 2026 from 50.1 in May, falling short of expectations of 50.5. This marked a five-month low, indicating that factory activity has largely stalled despite a marginal acceleration in output growth. New orders in manufacturing edged slightly higher, with a similar uptick recorded in new export business. However, overall momentum remained weak. Meanwhile, cost inflation eased but stayed elevated by historical standards. Manufacturer expectations improved for a second consecutive month, though sentiment remained subdued overall.

Germany’s S&P Global Manufacturing PMI was revised higher to 50.1 in May 2026 from a preliminary of 49.9, continuing to point to nearly stabilization in the manufacturing sector, as uncertainty and soaring costs associated with the war in the Middle East acted as headwinds to demand. It is also the lowest reading in four months, with goods producers recording a fall in new orders for the first time in 2026 so far, whilst also facing the biggest price increase since June 2022. Also, output growth softened for the second month running and job cuts deepened. Meanwhile, business expectations remained relatively muted, although they did improve slightly from April's recent low.

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.