New orders fall in German manufacturing darkening outlook - survey

New orders fall in German manufacturing darkening outlook - survey

BERLIN Reuters - A fall in new orders weighed on German manufacturing activity in June, darkening the outlook for Europe's largest economy, a survey showed on Friday.

S&P Global's final Purchasing Managers' Index PMI for manufacturing, which accounts for about a fifth of Germany's economy, fell to 52.0 in June from May's final reading of 54.8, in line with analysts' expectations and with a flash estimate.

An index on new orders fell from 47.0 in May to the lowest level since May 2020 and dropped below the 50 mark, which separates growth from contraction.

According to Phil Smith, economics associate director at S&P Global Market Intelligence, firms have downgraded their expectations for output over the next 12 months to the gloomiest for over two years because of the decline of backlogs, which is seeing a correction in underlying demand for German goods.

The survey noted some relief on the inflation front, with rates of increase in input costs and output prices slowing for a second straight month.

Smith said that it's difficult to untangle any relief from the supply side due to the effects of weaker demand.