Key findings:

Manufacturers remain in job-cutting mode

Comment:

Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“These are encouraging developments for the German manufacturing sector. Output has increased for six consecutive
months, and firms have received more new orders for three months in a row. This doesn’t mean that German industry is out
of the woods—far from it. However, the ability to expand production despite mounting challenges is a testament to its
resilience. These challenges include the looming disruption of trade relations with one of the most important non-EU
markets, the United States; intensifying competition from China; and pressure on competitiveness due to a stronger euro.

“German manufacturers are fighting on multiple fronts. Output prices remain under pressure, the backlog of orders continues
to shrink, and foreign demand for goods declined in August after a few stronger months. In response, firms have cut even
more jobs than in the previous month. The silver lining is that labour productivity is rising, as output continues to grow at a
solid pace.

“The growth in output is being driven primarily by the investment goods sector, where the index has reached a 28-month
high. The intermediate goods sector has also contributed to the expansion, while the consumer goods sector—which
includes pharmaceuticals and food products—is stagnating. Overall, we see an upward trend in output, which should be
supported by expansionary fiscal policy, including increased investment in infrastructure and defence.”