German manufacturing activity contraction loses momentum in January

By Tuba Ongun

The deterioration in the German manufacturing activity eased in January, with output, new orders and purchasing activity falling at the slowest rates in several months, a new survey showed.

The Hamburg Commercial Bank (HCOB) Flash Germany Manufacturing PMI increased from 43.3 in December to 45.5 in January, the highest reading since February 2023. But it is still below the 50 level that separates growth from contraction.

Weak demand continued to weigh on the manufacturing sector due to factors such as tight financial conditions and geopolitical tensions.

The rate of decline in new orders, however, eased notably from the month before, slowing to the weakest since last April.

"Although the German manufacturing sector remains entrenched in recessionary territory in January, the pace of the downturn is unmistakably slowing," said Cyrus de la Rubia, HCOB chief economist.

"This marks a continuation of a trend that has persisted for six consecutive months. Such a trajectory suggests that growth might make a comeback within the next few months."