The HCOB Germany Manufacturing PMI was revised higher to 48.4 in April 2025, up from a preliminary estimate of 48.0 and slightly above March's reading of 48.3.
Germany manufacturing PMI revised higher
Although still below the critical 50.0 threshold that marks the boundary between expansion and contraction, the latest figure represents the strongest reading in over two-and-a-half years and signals that the German manufacturing sector is edging closer to stabilization. The improvement was driven chiefly by a solid and accelerated increase in output, with production levels rising at the fastest pace since early 2022. This marked a notable shift after a prolonged period of industrial weakness, suggesting that manufacturers are beginning to recover some momentum.
The uptick in activity was underpinned by a modest but encouraging rebound in export orders, reflecting a partial recovery in international demand, particularly from European neighbors and select Asian markets. While global trade tensions and tariff risks—especially from the U.S.—remain a headwind, the data suggests that German exporters have managed to regain some traction, possibly aided by strategic diversification and favorable shifts in supply chains.
Business sentiment remains subdued
Despite the improvement in production and export performance, business sentiment remained subdued. Manufacturers remained cautious about the medium-term outlook, with many citing continued uncertainty surrounding global economic conditions, policy shifts, and currency volatility. As a result, firms continued to reduce workforce numbers for the twelfth month running, although the pace of job cuts slowed, indicating a more measured approach to cost control in light of tentative signs of recovery.
In terms of pricing dynamics, the April data revealed a notable shift: for the first time in almost two years, average prices charged by German manufacturers increased. This rise in output charges came despite a sharp and accelerated drop in input costs, reflecting falling prices for raw materials and energy. The ability to raise selling prices in a deflationary input environment suggests that manufacturers may be regaining some pricing power, potentially due to improved order books or shifts toward higher-margin products.
Inflection for Germany industrial sector
Taken together, the April figures point to an inflection point for Germany’s industrial sector. While challenges persist—including subdued business confidence and ongoing workforce adjustments—the acceleration in output and return to pricing power hint at a sector cautiously emerging from its recent downturn. Sustained improvement will likely depend on broader demand recovery, continued export resilience, and stabilization in global policy conditions.
