The HCOB Germany Manufacturing PMI rose to 48.3 in March 2025 from 46.5 in February, marking its highest level since August 2022 and aligning with preliminary estimates. The data signaled a continued recovery in the sector, with the pace of contraction slowing notably.
Germany manufacturing PMI rises as expected
Production increased for the first time in nearly two years, supported by stronger new orders, particularly in the intermediate goods sector. While demand conditions remained mixed, the uptick in domestic orders suggested a gradual revival in industrial activity. However, export sales continued to struggle, weighed down by subdued global demand and trade uncertainties, particularly in key markets such as China and the United States.
Business confidence reached a three-year high, as firms grew more optimistic about the outlook, supported by expectations of higher infrastructure spending and a potential rebound in economic activity. Despite this optimism, employment levels continued to decline, though at a slower rate than in previous months, indicating that businesses remain cautious about workforce expansion amid lingering economic uncertainties.
Input costs and factory prices decline
On the pricing front, input costs and factory prices saw a slight decline, benefiting from improved supply chain conditions and lower freight rates. The easing of cost pressures provided some relief to manufacturers, allowing them to stabilize pricing strategies and remain competitive in both domestic and international markets.
While domestic demand showed signs of improvement, the ongoing weakness in export sales suggests that Germany’s manufacturing recovery remains fragile. Firms are hoping that a broader global economic recovery will help support stronger external demand in the coming months, reinforcing the sector’s path toward expansion.
