German Factory Activity Stalls in May Amid Weak Demand and Rising Costs
Germany's Manufacturing Sector Faces Challenges in May
By Maria Martinez
Manufacturing Activity and PMI Data
BERLIN, June 1 (Reuters) - Germany's manufacturing sector stalled in May as waning demand and soaring costs linked to the war in the Middle East weighed on activity, a business survey showed on Monday.
The S&P Global Germany Manufacturing Purchasing Managers' Index (PMI) fell to 50.1 in May from 51.4 in April, a survey by S&P Global showed, holding above the 50 mark separating growth from contraction.
Expert Insights on Sector Performance
"The upturn in the manufacturing sector stalled in May, confirming the warning signs from recent PMI surveys that growth, being driven by the frontloading of orders, was likely to fade," said Phil Smith, Economics Associate Director at S&P Global Market Intelligence.
Order Volumes and Export Sales
Output growth slowed for a second straight month to its weakest pace since the current expansion began in January and backlogged orders fell after rising in each of the previous three months.
New orders fell for the first time in five months, and export sales also declined for the first time since January, the survey showed. Firms cited geopolitical uncertainty and high prices, although some customers brought forward orders to avoid disruption and price rises.
Cost Pressures and Employment Impact
Cost pressures intensified further, with input price inflation reaching its highest since June 2022.
Factory Job Losses Accelerate
"With margins under pressure, something had to give, and that 'thing' was employment, with factory job losses accelerating to the quickest since early 2025," Smith said.
Business Expectations and Sentiment
Business expectations for production over the coming year improved slightly and returned to positive territory.
However, sentiment remained well below February's level, amid concerns about inflation, customer hesitancy and supply shortages.
(Reporting by Maria Martinez; Editing by Toby Chopra)
