In 2019 German manufacturing experienced its worst downturn in years, underlining that the engine of the Euro Zone’s biggest economy is only sputtering.

Germany's export-dependent economy has been seriously affected by the global economic slowdown, trade tensions related to China, the US, and Brexit, as well as by a sharp decline in automobile production, which has been disrupted by new emissions rules and the shift to electric vehicles. For example, as of October automobile production in Germany recorded a 14.4% year over year decline.

German automotive firms and their suppliers have announced that about 50,000 jobs will be lost or are at risk in Germany since their traditional businesses have become less profitable.

Trade concerns may have lessened a bit, particularly because of the "phase one" trade deal between the US and China and well as because of the somewhat clearer path for the formal exit of Britain from the European Union.

Nonetheless, Germany has had a terrible manufacturing performance in all of 2019. The reported Purchasing Managers' Index (PMI) for German manufacturing was only 43.7 in December, and since any reading below 50-mark indicates contraction, Germany’s manufacturing sector experienced a full year of contraction last year.  

As well, the latest German factory orders were equally terrible last year, and as the following chart shows, year-over-year orders recently were declining at around a 6% annual rate at year-end.

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The IHS Manufacturing PMI For Germany

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