Germany’s HCOB Manufacturing PMI slipped to 48.0 in April 2025, down from 48.3 in March. While still below the 50-point threshold that separates expansion from contraction, the figure came in above market expectations of 47.6 — hinting at modest resilience in the industrial sector.

Key Takeaways from April Report

✅ Production & New Orders: Second Month of Growth

• Production and new orders rose for the second consecutive month.
• Export sales increased for the first time in three years, offering a rare bright spot.
• Growth was largely driven by frontloading (early ordering) and inventory accumulation, rather than sustainable demand.

📉 Input Costs Decline:

• Costs for raw materials and energy fell in April.
• Causes include:
  • Lower global commodity prices
  • Heightened supplier competition
  • A stronger Euro
• 📈 Output Prices Rise for First Time Since May 2023
• Manufacturers increased their selling prices, particularly in dual-use goods (civil/military).
• The uptick reflects anticipation of higher defense spending amid shifting geopolitical priorities.

Expert Insight

Dr. Cyrus de la Rubia, Chief Economist at HCOB:

“The decline in input costs, especially energy, could improve profit margins for manufacturers — even if demand remains sluggish.”

Quick Education: What is the PMI?

The Purchasing Managers’ Index (PMI) is a vital gauge of manufacturing activity.

• A reading above 50 indicates expansion
• A reading below 50 signals contraction

✅ It is based on surveys covering:

• New orders
• Output levels
• Employment
• Supplier delivery times
• Inventory levels

Read More: What Is Germany’s DAX Index?

📊 Outlook: Where is German Industry Heading?

🔹 Positive Indicators:

• A rebound in exports, especially in defense-related sectors
• Lower input costs boosting margins
• Government policy shifts favoring defense and infrastructure spending

🔸 Challenges & Uncertainty:

• Temporary boost in orders may not reflect long-term demand
• PMI remains below 50, signaling ongoing weakness
• Global demand pressure and trade tensions remain key risks

📌 Bottom Line

Germany’s manufacturing sector showed tentative signs of improvement in April, but the recovery remains fragile. Falling costs may cushion margins, yet a true rebound in production will depend on sustained domestic and global demand.

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