BERLIN (Reuters) – German manufacturers’ new orders grew at their fastest pace in more than three years in June, driven by rising demand both domestically and internationally, a business survey showed on Tuesday.
The HCOB final Purchasing Managers’ Index (PMI) for German manufacturing, compiled by S&P Global, rose to 49.0 in June from 48.3 in May, its highest level since August 2022 but still slightly below the 50 level denoting growth.
New orders rose for the third time in four months, with export orders particularly strong driven by demand from China, Europe, and the United States.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, described the rise as “encouraging” as it showed that it was not just U.S. importers trying to pre-empt higher tariffs, but also domestic demand showing signs of life once again.
However, the strength of the recovery is somewhat called into question by the accelerated pace of job cuts, he added.
Factory employment continued to decline, marking the most significant drop in four months, which along with reductions in stocks of purchases kept the PMI in contraction territory.
The decline in workforce numbers, now stretching to two years, reflects reduced capacity utilisation and efforts to boost productivity, according to the survey.
Business expectations improved, reaching their highest level since February 2022, with optimism linked to anticipated economic upturns and the government’s investment plans.
“Signs of a recovery, albeit a somewhat sluggish one, are increasing,” said de la Rubia.
“Overall, the headline PMI is pointing upward and is on the verge of crossing into expansion territory.”
(Reporting by Miranda Murray; Editing by Hugh Lawson)
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