BERLIN (Reuters) - The downturn in Germany's manufacturing sector, which accounts for about a fifth of the country's economy, eased in November, a survey showed on Friday.
The HCOB final Purchasing Managers' Index (PMI) for manufacturing rose to 42.6 in November from 40.8 in October, increasing for the fourth month in a row but still far below the 50 level that separates growth from contraction.
"Even though the November data still places the sector in the recession arena, the rate of output decline is tapping the brakes compared to the previous month," said Cyrus de la Rubia, Hamburg Commercial Bank (HCOB) chief economist.
Businesses reported the slowest declines in both output and new orders for six months, the survey showed.
Expectations for future activity meanwhile improved but remained pessimistic, the report showed.
"We have to consider that the German constitutional court's bombshell regarding debt brake compliance was only partly considered during the November survey period," de la Rubia said.
The German government was forced to freeze most new spending commitments after the court blocked plans to re-purpose billions of euros of unused pandemic funds towards green projects and subsidies, triggering warnings about growth and an industrial exodus.
"In this respect, the industry might be at the forefront of this judicial budget storm," de la Rubia said.
Employment was one of the few areas where the latest PMI data showed a faster rate of decline, with factory workforce numbers dropping at the greatest extent since October 2020.