Germany's export-reliant manufacturers are suffering from a slowing world economy and business uncertainty linked to a trade dispute between the United States and China as well as Britain's planned but delayed exit from the European Union. The final PMI for manufacturing, which accounts for about a fifth of the German economy, fell to 41.7 in September from 43.5 the previous month. This was the lowest reading since 2009 when the global financial crisis pushed the German economy into a contraction of nearly 6%.
"The downward trend in new orders, which fell the most in more than 10 years, is a particular worry, and continues to drive cutbacks in factory output, employment and prices," IHS Markit economist Phil Smith said. The job losses in manufacturing broadened in September, reaching a scale at which they could start to weigh more heavily on so far relatively resilient consumer morale, Smith said.
The weakness seen for a long time across the intermediate and investment goods sectors also showed signs of spreading to consumer products, he added. Germany's leading economic institutes will on Wednesday lower their economic growth forecasts for this year and next, sources told Reuters on Monday, adding to fears that the recession among export-driven manufacturers is spreading.
The institutes expect the German economy to grow by 0.5% this year and by 1.1% in 2020, sharply down from their April forecasts of 0.8% and 1.8% respectively, the sources said.