Germany's manufacturing sector moved deeper into contraction in November as the manufacturing PMI fell to 48.2, its lowest point in nine months and 0.2 points behind the consensus forecast. The sharpest drop in new orders in ten months drove this decline, reflecting persistent customer uncertainty and weakening export demand across Asia, Europe, and North America.

Although production continued to grow, it did so at a much slower pace, supported mainly by clearing backlogs rather than fresh demand. Factories remained in retrenchment mode, cutting jobs, reducing purchasing activity, and running down inventories to boost cash flow.

Supplier delivery times lengthened for the third consecutive month despite subdued demand, with firms citing low stock levels at suppliers and ongoing chip shortages. Cost pressures appeared to stabilise as input prices fell only marginally, while competitive pricing pushed output charges down again after a brief rise in October.

Forward-looking sentiment improved slightly but remained historically muted, signalling cautious optimism rather than a clear turnaround. Overall, the November PMI data depict a weaker sector, balancing fragile demand, cautious production decisions, and lingering supply-side frictions. These updates take the RPI to minus 14 and the RPI-P to minus 17, meaning that economic activities continue to fall behind the expectations in Germany.

The consensus sees no revision from the November flash at 48.4, down from 49.6 in the October final.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 500 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are released by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the Markit PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.