German Manufacturing Shows Signs of Hope Despite May Contraction

German Manufacturing PMI in May

• 📉 The Purchasing Managers' Index (PMI) for German manufacturing in May was 48.3, a slight decrease from April's 48.4, indicating continued contraction.
• 📊 This marks the 35th consecutive month of readings below 50, which signifies contraction in the sector.

Output and Export Growth

• 📈 Despite the overall contraction, production volumes increased for the third consecutive month.
• 🌍 New export orders saw a modest rise, with stronger demand reported from Europe and increased sales to the US.
• ⚠️ This export growth was partly driven by stockpiling in anticipation of potential tariff increases.

Employment and Business Outlook

• 📉 Employment continued to decline, though the pace of job shedding was the slowest since January 2024.
• 💡 Business expectations rebounded significantly in May, reaching their highest level since February 2022.
• 💰 Hopes for increased public sector spending and a potential US-EU trade agreement are buoying business sentiment.