Conditions across the sector worsened amid growing concerns about the economic outlook and high energy costs, it noted.

There was some alleviation of overall costs pressures, however, with falling demand for materials and an associated easing of supply-chain constraints contributing to a slowdown in input price inflation to a 21-month low.

The downturn in Germany’s manufacturing sector started gathering pace at the start of the fourth quarter this year, according to latest S&P Global purchasing managers’ index survey. Goods producers’ reported the steepest drop in output since May 2020, while also noting a deepening decline in new orders, the business and financial information firm said.

The headline seasonally-adjusted S&P Global / BME Germany manufacturing PMI, a single-figure measure of sector performance derived from measures of new orders, output, employment, suppliers’ delivery times and stocks of purchases, moved further below the 50.0 no-change mark that separates growth from contraction in October.

At 45.1, down from September’s 47.8, the latest reading was the lowest since the initial COVID-19 wave in early-2020, the firm said in a note.

The fall in the headline index in October was driven by faster declines in both output and new orders.

One area where manufacturers did report notable retrenchment was the purchasing of inputs. Buying levels fell for the fourth month in a row and to the greatest extent since June 2020, as goods producers reacted to falling output requirements and were somewhat less inclined to build up stocks, S&P Global noted.

Pre-production inventories rose at the slowest rate for seven months. Growth of stocks of finished goods showed a more pronounced slowdown. Here, the latest increase was only marginal.

German manufacturers showed increased pessimism towards output over the coming year. Expectations slumped to the lowest since the initial COVID-19 outbreak, amid concerns over persistently high inflation, elevated energy costs, rising interest rates and the prospect of recession.

Fibre2Fashion News Desk (DS)