A loss of momentum in overseas export markets has now been recorded for six successive months following April’s recent peak. As such, the index illustrates that goods producers in Germany are facing a severe headwind to order books from a cyclical retrenchment in customer demand among major trade partners, S&P Global and the Hamburg Commercial Bank (HCOB) said in a joint press release.
Germany’s manufacturing PMI export conditions index declined to 47.6 in October 2023—the lowest reading since November 2022, indicating a persistent global economic downturn.
The index has been dropping for six months, reflecting challenges in Germany’s export markets.
German manufacturers face challenges like the energy crisis and rising protectionism.
Lacklustre economic performance was centred on Europe in October, with trade-weighted export conditions weakening to the greatest extent since May 2020. The downturn reflected persistently subdued HCOB composite PMI readings for France and Italy. Central European economies also struggled in October, whereas those in Southern Europe, such as Spain and Greece, showed a degree of resilience.
There was a mixed picture for export markets across Asia, with economic stagnation in China somewhat overshadowing resilient growth in India, Japan, and several ASEAN nations. Sustained economic growth in the US was the main bright spot for exporters in October, with private sector output in expansion for the ninth month in a row.
Aside from subdued overall demand trends, manufacturers in Germany have cited a myriad of longer-term export challenges, including those arising from the energy crisis, competitive pressures in key markets, and the threat of rising global protectionism. However, a positive development for exporters in 2023 so far has been a swift recovery in international supply chain performance after the severe disruptions experienced in the previous two years.
Supply-side conditions in Germany continued to improve more quickly than in the US, China, and elsewhere in Europe. A rapid post-pandemic recovery in supplier performance therefore provides some optimism that the German manufacturing sector will find itself well positioned to capitalise on any turnaround in global demand conditions over the course of 2024.
October data indicated that Germany’s downturn in export orders was part of a global pattern of weaker international trade flows. The vast majority of national and regional manufacturing PMIs pointed to lower export sales during the latest survey period, with India, the Philippines, and Vietnam the main exceptions. Goods producers in these nations often commented on a boost from international supply chain diversification and subsequent increases in foreign direct investment.
Fibre2Fashion News Desk (NB)
