FX.co ★ Germany Manufacturing Contracts for 1st Time in 10 Months

The HCOB Germany Manufacturing PMI dropped to 47 in December 2025, down from 48.2 in November, falling short of the preliminary forecast of 47.7. This indicates the most significant contraction in ten months. For the first time after a nine-month period of growth, output declined primarily due to reduced demand. New orders decreased for the third instance over the past four months, with export sales experiencing their quickest decline since December 2024. In reaction, manufacturers have taken a more defensive approach by significantly reducing employment, purchasing activities, and input stocks. Additionally, supplier delivery times have lengthened for the fourth consecutive month, and input costs have increased for the first time in nearly three years, primarily attributed to rising metal prices. However, intense market competition has hindered firms from transferring these costs to consumers, resulting in further reductions in factory gate prices. Despite the current challenges, business sentiment has improved, buoyed by the anticipation of launching new products and increased spending on defence and infrastructure.