German manufacturing sector ends 2025 in deepening downturn, PMI shows

BERLIN, Jan 2 (Reuters) - Germany's ⁠manufacturing sector ⁠faced ‍a deepening downturn at the end of 2025, with output declining for the first time in ‍10 months in December amid a sustained drop ​in demand, a business survey showed on Friday.

The HCOB final Purchasing ​Managers' Index (PMI) for German manufacturing, compiled by S&P Global, fell to 47.0 in December from 48.2 in November, a bigger decline than the ​preliminary reading of 47.7 for the final month of the year.

Readings below 50.0 indicate contraction while those above ​point to growth.

The decline was largely driven by a sharp fall in export ‌sales, which have now decreased for five consecutive months, with the rate of decline accelerating to ​its fastest since December 2024.

"Manufacturing had ⁠shown hints of recovery earlier in 2025, but the downturn has deepened again in December, ‌driven by investment and consumer goods," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank AG.

The survey highlighted a ‌challenging environment for German manufacturers, with employment, purchasing activity and stocks ‌of inputs all seeing deeper cuts.

Workforce numbers fell at the steepest rate in six months.

However, manufacturers remained optimistic about future production, with ‍expectations reaching a six-month high.

Firms expressed hopes for a demand boost from new products and ⁠increased defence and infrastructure spending.

"With the start of government-backed infrastructure projects and the booming demand for defence equipment, things could look different in 2026," de la Rubia said.

(Reporting by Miranda Murray; Editing by Hugh Lawson)

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