The German manufacturing sector saw a ‘marginal upturn’ in export conditions in May, according to the latest HCOB Germany Manufacturing PMI Export Conditions Index.
The Index rose to 50.4 in May, up from 50.2 in April – the fourth consecutive month in which it has remained above the ‘neutral’ threshold of 50, although it still ranks below the long-term average of 52.2.
Notably, the new export orders index for German manufacturers rose to 51.0 in May, up from 50.3 in April. While this was indicative of a slight upturn in new orders from abroad, it was still at the highest level since February 2022.
Bucking the trend
The improvement in German order books from abroad contrasts with subdued global trade volumes in May, with the ‘vast majority’ of surveyed economies seeing a downturn in manufacturing export orders, including Canada, Mexico and the United Kingdom.
India, Australia and Germany bucked the trend, however, seeing the strongest upturns in new orders from abroad.
Within the German manufacturing sector, new export orders were strongest in the Machinery & Equipment sector, the data showed, which saw its index rise to 55.3, up from 53.7 in April, the fastest pace of expansion since April 2022.
Elsewhere, the Chemicals sector saw a marginal increase in new export sales, supported by demand from clients in Asia and Europe, while the Automobiles & Auto Parts sector also reported a slight increase.
‘Marginal improvement’
“At first glance, export conditions in Germany have improved only marginally,” commented Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. “There is virtually no momentum coming from Europe and Asia, whereas sales opportunities in the US have clearly brightened.
“This is consistent with the observation that US companies have brought forward imports of goods in recent months in order to preempt tariffs or tariff increases. This observation is also confirmed by the massive build-up of inventories in the US manufacturing sector. This build-up carries a certain risk of a setback.”
At the same time, de la Rubia noted that the rise in export orders across the German industry as a whole signals that “something is indeed gaining momentum here. For example, mechanical engineering companies have now recorded three consecutive months of rising foreign orders, and orders for automobiles, automotive parts, and chemical products have also been stronger for two months.”
This, along with the upturn in export orders in the three major eurozone economies since the start of the year, indicates that “exporters could gradually regain their footing after the long recession of recent years.” Read more here.
