Title: Manufacturing Sector Contraction in Germany Eases but Continues in October

The HCOB Germany Manufacturing PMI indicates that the German manufacturing sector continues to contract, although the rate of decline has slightly eased in several key metrics. Production, new orders, employment, and inventory levels have all shown a slower decline compared to September, while business expectations have revealed a somewhat less pessimistic outlook.

Due to strong competition for new business and the pressure to pass on cost savings from lower input prices, there has been an accelerated decline in output prices across the goods-producing sector. The HCOB Manufacturing PMI rose to 43 in October, up from September's 12-month low of 40.6, reaching its highest level since July. However, this value, which remains well below the neutral level of 50.0, indicates that rapid contraction in the sector continues.

In October, production volumes continued the trend seen over the past year and a half. Although the rate of decline has slowed compared to the significant drop in September, the overall situation still reflects a clear downturn. The recent decline in new orders was slower than the decrease recorded in the previous month, partially reflecting international sales, which experienced the smallest decline in five months in October.

Jonas Feldhusen, Senior Economist at Hamburg Commercial Bank, commented on the PMI data:

"The situation in the German industry did not change in October. However, there are signs that an economic bottom may have been reached. Although the headline PMI remains deep in recession territory in October, it showed a slight improvement from a very low level. Caution is warranted when interpreting these values, as this is merely a one-month improvement. The coming months could shed light on whether the trend can sustainably reverse. There is a glimmer of hope in the order situation. Although new businesses are still contracting, the pace of the decline has significantly slowed, indicating a possible stabilization in the coming months.

All subsectors are caught in a downturn. The performance of companies in the consumer goods sector continued to worsen in October. However, the declines in production and orders have not been as severe as in previous months. The situation appears even worse in the capital goods and intermediate goods sectors. Particularly concerning is the growing prevalence of layoffs across the labor market, not just at Volkswagen, where the closure of three factories and extensive layoffs have been announced."