Hardly any bright spots for German industry at the end of 2024

Incoming orders also fell significantly: the rate of contraction exceeded the annual average. According to survey participants, the main reasons for the decline were a general reluctance on the part of customers, destocking and uncertainty on the markets. As a result, the HCOB Purchasing Managers' Index Germany (EMI), compiled jointly with the German Association of Materials Management, Purchasing and Logistics (BME), stood at 42.5 points in January 2025, below the November and October 2024 values (43.0 points each) and thus deeper in the contraction zone below 50 points.

Slower decline in employment and inventories

As old orders were processed more quickly than new ones came in, many manufacturers continued to cut jobs. As a result, employment fell for the eighteenth consecutive month last December. However, the decline was the weakest since August 2024. The ongoing slump in demand also led companies to further reduce their inventories of primary materials and finished goods. However, the decline here was the smallest in the past ten months.

Delivery times shorten, purchase prices fall

A further reduction in purchasing volumes was the reason why delivery times in December of the previous year were shorter than at any time since August 2024. Once again, the survey participants cited better material availability and low supplier capacity utilization as the causes.

Average purchase prices fell for the 23rd time in a row. However, the drop was the smallest in four months. One reason for the fall - in addition to the discounts granted - was lower energy and raw material costs.

Business outlook not very optimistic

German manufacturers remain cautiously optimistic about the future at the end of 2024. The business outlook deteriorated slightly compared to the previous month and was therefore well below the long-term average. Some companies are expecting positive impetus from the launch of new products and entry into new markets. Many survey participants hope that the economy will pick up again after the general election in February. However, they are also concerned about the ongoing political uncertainty and ailing sectors such as the automotive industry and the construction sector.