German manufacturing export outlook improves marginally in January

January data indicated faster expansions in private sector output across both developed and emerging markets, with developed economies registering a slightly stronger pace of growth. While the upturn in emerging market export conditions was only marginal, it marked the joint-highest reading since May 2023,  S&P Global said in a press release.

Asia retained its position as the best-performing global region. Major export destinations such as mainland China, India and Japan recorded stronger economic expansion. In contrast, subdued business conditions in France weighed on Europe’s overall trade-weighted performance.

North America presented a mixed picture. Export conditions improved at a quicker pace overall, supported by stronger economic growth in the United States. However, heightened business uncertainty and ongoing US trade tensions contributed to further declines in output volumes in Canada and Mexico.

Despite the improvement in global conditions, German manufacturers continued to report a contraction in new export orders. The HCOB Germany Manufacturing PMI New Export Orders Index rose sharply to 49.3 in January from 45.3 in December, marking a three-month high. However, the index has remained below the 50 no-change mark since August 2025.

Survey respondents cited geopolitical tensions, elevated global economic uncertainty and intense competitive pressures as factors dampening export sales. Where growth was reported, firms often linked it to rising technology sector spending and stronger demand from the UK and the US.

Globally, manufacturing export sales were broadly stable. The respective index edged up to 49.9 in January from 49.1 in December, the joint-highest level since March 2025.

Asian economies again outperformed in terms of export orders, with expansions recorded in China, India, Japan, South Korea and several ASEAN nations. Most euro area countries reported declines, with Greece and the Netherlands being exceptions. Canada posted the steepest global reduction in new export orders, followed by Brazil.

Within Germany, export weakness was broad-based across key sub-sectors. Consumer non-cyclicals and machinery and equipment also saw solid declines.

Commenting on the report, Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: “Export conditions for German companies improved only slightly at the beginning of the year compared to December. Opportunities to sell goods increased most strongly in Asia. Momentum here is coming from the large markets of China, Japan, and India. In the US, the economy and general willingness to buy have also shown progress, but this does little to change the new trade restrictions. In addition, the situation in Mexico and Canada has deteriorated. In Europe, the most important market for German export companies, sales opportunities have improved only marginally. France has been holding back, which is certainly due to the continuing political uncertainty.

“The cautiously positive development of the global economy is also reflected in the export order intake of German companies, which has recently declined only slightly. It is certainly too early to announce a turnaround here, especially since there is still a clear majority of countries worldwide where export orders are declining. These include the three large eurozone countries France, Italy, and Spain. It is unlikely to be exports that will drive growth in Germany this year, but rather the domestic economy, fuelled by infrastructure and defense spending.”

Fibre2Fashion News Desk (SG)