Germany in grip of ‘pervasive downturn’ – newest updates

Germany is in the grip of a “pervasive downturn,” economists have warned, as its dominant manufacturing sector struggles just as new figures show its declining birth rate is storing up problems for the future.

European manufacturers remained in recession as output was dragged down by poor performance in Germany, closely watched data showed.

The HCOB Eurozone Manufacturing PMI – considered a key measure of economic health – slumped to a four-month low of 45.7.

A reading below 50 indicates a contraction – and the eurozone has been in this negative territory for 22 consecutive months.

Germany and Austria were the worst performers, although the figures showed that factory production shrank at the softest rate in a year.

Germany’s manufacturers delivered a reading of 42.5, which was well below the average recorded (44.0) since the current downturn in business conditions began in mid-2022.

Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: “What is going to rescue the eurozone economy? While this is a difficult question, one thing is clear: It’s not the manufacturing sector. 

“Of particular concern is Germany, the industrial powerhouse, grappling with a pervasive downturn spanning key sectors including capital goods, intermediate goods, and consumer goods.”

Meanwhile, German births have fallen to their lowest level in a decade in a sign of the demographic challenges facing Europe’s largest economy.

The number of babies born last year dropped by 6.2pc compared to 2022 to fewer than 700,000, which was the lowest level since 2013, according to the federal statistics office Destatis.

The number of first births to families fell to its lowest level since 2009, indicating more people are waiting to start a family.

Declining birth rates are a problem for Western economies as it means governments eventually face declining tax revenues just as spending on pensions would increase.

Germany’s economy, which narrowly avoided a recession at the start of this year, is contending with an ageing population and also a declining number of marriages.

There was a 7.6pc decline in nuptials in 2023, which took the number of marriages to their lowest level since records began in 1950, excluding the pandemic year of 2021.

Read the latest updates below.