Germany's August Final Manufacturing PMI Revised Up to 54.3

• The previous month's reading was 52.2

Main points from the data:

• Output recorded its strongest increase since January 2022, buoyed by a surge in new orders
• Supply chain strains worsened further, driving a sharp rise in purchasing activity
• Business confidence reached its highest level since just prior to the start of the Middle East war in February

Commentary:

Phil Smith, Economics Associate Director at S&P Global Market Intelligence:

"The recovery in the German manufacturing sector kicked up a gear in August, with a jump in new orders helping propel output growth to its highest since early 2022. The upturn is being led the intermediate goods sector, i.e. makers of inputs for other goods, suggesting growth is still being supported to a degree by safety stockpiling amid tight supply conditions.

"But there are also signs of growing optimism about underlying demand fundamentals. The mood among businesses about output in the year ahead has improved noticeably and is now the brightest seen since the Middle East conflict began.

"Manufacturers still aren't confident or busier enough to be back in hiring mode yet, but a further slowdown in the pace of losses is a sign that factory jobs might be close to stabilising after more than three years of staff retrenchment.

"Elevated cost pressures remain a constraint on hiring, and although input prices rose at their slowest rate for six months in August, there are still upside risks to inflation from oil markets and supply chain disruption. Supply chain pressures intensified to the worst for three months in August, exacerbated by the bottlenecks being created by the AI boom and drought conditions in Europe."