BERLIN Reuters German manufacturers started the year with a slightly brighter outlook on the year ahead despite the fact that orders fell as inflation and supply chain problems eased, a survey showed on Wednesday.
S&P Global's final Purchasing Managers' Index for manufacturing, which accounts for about a fifth of Germany's economy, rose to 47.3 in January from 47.1 the previous month.
It was the third month of improvement, although the upward trend lost steam in January. The main drag on the headline index was new orders, even though the decline in that sub-index slowed for the third month in a row.
Since July, the German manufacturing PMI has been below the 50 mark, indicating shrinking activity.
In January, a Reuters poll of analysts had pointed out a slight decline, with an estimate of 47.0, in line with an earlier flash reading.
Phil Smith, Economics Associate Director at S&P Global Market Intelligence, said there were ongoing concerns about the current picture of demand in the sector but businesses were approaching the year with cautious optimism.
German manufacturers are cautiously optimistic about the coming year, with more firms expecting a rise in output than a decline for the first time since Russia's invasion of Ukraine, Smith said.
In January, the sub-index for future output increased to 53.5, up from 48.8 the previous month and back to positive territory for the first time since February 2022, when the war began.
Expectations remain relatively low amid a backdrop of still-high inflation and economic uncertainty, he added.