The latest data confirms that German manufacturing is indeed struggling. The HCOB Flash Germany Manufacturing PMI for July 2024 fell to 42.6, the lowest in three months, indicating a significant contraction in the sector1. This decline is driven by a deeper drop in production and new orders, with employment also seeing a steep decline1.
While the service sector has shown some growth, it hasn’t been enough to offset the downturn in manufacturing. The overall economic outlook for Germany remains challenging, with the manufacturing sector’s weakness persisting1.
Regarding the impact of Russian sanctions, they have indeed played a role in exacerbating the economic difficulties in Germany, particularly by disrupting supply chains and increasing energy costs1.
It’s a tough situation for Europe’s largest economy.
German manufacturing is still hemorrhaging in the flash Jul PMI, more than offsetting growth in the service sector as overall output and employment both contract; things have really fallen apart in Europe's largest economy, and Russian sanctions played a key role in the collapse: pic.twitter.com/L5lN6xkPHe
— E.J. Antoni, Ph.D. (@RealEJAntoni) July 25, 2024
Sources:
tradingeconomics.com/germany/manufacturing-pmi
www.forexfactory.com/calendar/266-eur-german-flash-manufacturing-pmi
www.pmi.spglobal.com/Public/Home/PressRelease/7da2f1b22f92492283ff1abbab5bd333