The manufacturing sector in Germany, the largest economy in the eurozone, came to a near standstill in May 2026 as high costs caused by the war in the Middle East and growing geopolitical uncertainty negatively impacted demand.
According to data released by S&P Global, the German Manufacturing Purchasing Managers' Index (PMI) fell to 50.1 in May from 51.4 in April. The index, which remains just above the 50% threshold separating growth from contraction, indicates that the sector's prospects remain fragile. The May data showed the first decrease in the number of new orders received by German manufacturers in 2026. Although some companies reported that customers had postponed order deadlines to avoid potential price increases and supply chain disruptions caused by the conflict in the Middle East, it was emphasized that high costs and a general atmosphere of uncertainty were negatively affecting overall demand. Consumer goods manufacturers recorded a sharp decline in orders, while export sales also fell for the first time since January. Factory job cuts accelerated Phil Smith, deputy director of economics at S&P Global Market Intelligence, said the recovery in Germany's manufacturing sector stalled in May. Smith noted that the signals from recent PMI surveys indicating that growth driven by advancing orders will lose momentum have now been confirmed. Noting that new orders declined for the first time this year due to high uncertainty and rising prices, Smith said the weakness in demand had become apparent. Smith said that price pressures in the manufacturing sector continue to increase, but manufacturers remain cautious about pricing due to weak demand. "In an environment where profit margins are under pressure, something had to be done, and that 'something' was employment. Job losses at factories have reached the highest level since the beginning of 2025," he said. Smith added that business expectations for the future have improved slightly since the beginning of 2025. The low levels seen in April were fueled by hopes for a possible agreement that could end the conflict in the Middle East. However, he warned that "even if a peace agreement is reached and we see the Strait of Hormuz reopen, disruptions in the system and strong inflationary pressures will continue for some time." Source: AAAuthor: Editorial staff of SteelRadar
Steelradar.com
