German economy loses considerable momentum at Q2 2023 end: HCOB survey

24 Jun '23

2 min read

Pic: Shutterstock

Insights

The German economy lost considerable momentum at the end of the second quarter this year, a survey found.
With a notable slowdown in business activity growth, company expectations slumped to a six-month low.
Inflationary pressures continued to ease during June, with manufacturers recording the first fall in output prices for over two-and-a-half years.

The German economy lost considerable momentum at the end of the second quarter (Q2) this year, according to the latest flash purchasing managers’ index (PMI) survey from the Hamburg Commercial Bank (HCOB).

Deteriorating demand conditions have led to a notable slowdown in business activity growth, S&P Global said in a release.

Company expectations meanwhile slumped to a six-month low, whilst the rate of job creation also ticked down.

Inflationary pressures continued to ease during June, with manufacturers recording the first decrease in output prices for over two-and-a-half years.

The headline HCOB flash Germany composite PMI output index posted a notable decline in June, dropping from May’s 53.9 to 50.8. Although still above the 50 threshold that separates growth from contraction, the latest reading signalled a sharp slowdown in the rate of expansion to a four-month low.

This reflected a deepening downturn in manufacturing output (index down from 47.4 to 44.2), the press release noted.

Businesses reported a worsening of demand conditions at the end of Q2. This was underscored by a second straight monthly reduction in total inflows of new work, with rate of decline quickening to the fastest since last December.

Weakness remained centred on the manufacturing sector, where order books fell at the sharpest pace for eight months amid reports of customer hesitancy and destocking.

Backlogs of work across the country’s private sector fell at a faster rate in June, with firms increasingly relying on their outstanding business to support activity levels.

Factory workforce growth came close to stalling, with manufacturers registering only a fractional rise in employment that was the smallest seen for almost two-and-a-half years.

Manufacturing output charges fell for the first time since September 2020, with firms commenting on the influence of growing competitive pressures and a sustained reduction in purchasing costs.

Latest data showed a further weakening of business confidence towards the year-ahead outlook, with expectations falling for the fourth month running to their lowest in 2023 so far.

Pessimism grew in the manufacturing sector, where firms voiced concerns about a sustained downturn in new orders and a broader economic slowdown.

ALCHEMPro News Desk (DS)

More Textiles News - Germany...