German manufacturing output declined in June at a rate unchanged compared to the previous month, according to the latest Markit/BME survey. June’s steep fall in production reflected a similarly sharp reduction of incoming new work. However, new order volumes dropped at the slowest rate for nine months and job shedding was the weakest since January. This helped lift the seasonally adjusted Markit/BME Purchasing Managers’ Index® (PMI®) – a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy – to 40.9 in June, from 39.6 in May. The latest PMI reading was the highest since October 2008, but still represented a marked deterioration of overall operating conditions.

The index measuring manufacturing output was unchanged in June, following its ascent to an eight-month high in May. This signalled a further sharp drop in production, but one that was much less marked than at the start of the year. The latest reading was also slightly above those registered at the height of the 2001 downturn.

Providing some support to output levels in June was a more moderate fall in new work, combined with the completion of outstanding orders. Lower volumes of incoming new business have been indicated continuously since July 2008, but the rate of contraction has eased in each of the past four months. A similar trend has been recorded for new export orders. Anecdotal evidence suggested that the latest sharp drop in new work from abroad had been driven by weak demand from the UK and within the Eurozone. In contrast, China was cited as an area of new export order growth.