Economic Buzz: German manufacturing returns to modest growth in June
The headline PMI edged up to 50.3 in June from 50.1 in May, remaining just above the 50.0 no-change mark and signalling broadly stable business conditions.
Manufacturing output increased at a modest pace, supported by a renewed rise in new orders after a brief decline in May. Export orders also returned to growth, helped by demand from the defence and technology sectors, although high prices and market uncertainty continued to weigh on overall demand. Firms also benefited from clearing existing backlogs of work, which declined for a second month.
Cost pressures remained elevated as higher energy, transport and raw material prices continued to affect manufacturers following the conflict in the Middle East. However, both input cost inflation and output price inflation eased to their weakest levels in three months, while supplier delays moderated to a four-month low, although supply chains remained under pressure.
Manufacturers reduced purchasing activity and inventories as part of efforts to lower costs and preserve working capital. Employment also continued to decline, extending the current downturn to three years, although the pace of job losses eased. Business confidence improved slightly from April?s recent low but remained below the long-term average.
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