The stock market in Germany exhibited a positive tone on Monday, as the DAX index, a benchmark for the country's blue-chip shares, experienced a modest uptick of 0.13%. This rise comes in the wake of new data that underscores the persistent struggles facing Germany's manufacturing sector, raising concerns among investors and analysts alike. According to S&P Global, the recent results from the HCOB PMI survey have delivered what many would describe as "more bad news" concerning the manufacturing landscape.
The HCOB Germany Manufacturing PMI has plummeted to a five-month low of 42.4 in August, down from 43.2 in July. This downturn in manufacturing output is particularly troubling, even as the index registered a slight recovery, hitting a two-month high of 42.8 in August—an increase from 42.5 in the previous month. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, provided insight into the ongoing crisis, asserting, "The recession in Germany's manufacturing sector is dragging on far longer than anyone could have anticipated.
The data for August revealed an even more pronounced decline in incoming orders, extinguishing any immediate hopes for a swift recovery. The HCOB PMI report indicates that this downturn has been in effect since mid-2022, a duration that is decidedly atypical." Adding to the analysis, de la Rubia noted, "Historically, data from the last three decades show that the manufacturing industry typically rebounds within 20 months of a recession's onset.
However, this scenario is strikingly different, with China emerging as a significant challenge. The Asian giant is intensifying its competitive strategies against German industrial firms—not only within China's borders but also in Germany and other crucial marketplaces, especially in sectors such as automotive and mechanical engineering." In a noteworthy political development, the far-right party Alternative for Germany (AfD) scored a remarkable victory in regional elections on Sunday, marking the first win for a far-right party in post-war Germany's state elections.
According to Deutsche Bank Research, this electoral outcome holds significant implications for the country's political landscape. Turning to the broader eurozone, the manufacturing sector continues to operate under pressures of contraction. The HCOB Eurozone Manufacturing PMI remained unchanged month-over-month at 45.8, while the output indicator showed a modest improvement, landing at a two-month high of 45.8 in August, slightly up from 45.6 in July. On a corporate note, SAP ($SAP) has initiated the third tranche of its 5 billion-euro share buyback program, valued at 1.6 billion euros.
The software giant aims to reacquire 8,092,251 shares via the Frankfurt bourse’s Xetra trading system under this third tranche, which is set to extend until at least April 25, 2025. Following this announcement, SAP’s stock rose by 0.57%..