German manufacturing sector mired in downturn in November, PMI shows

BERLIN (Reuters) - Germany's manufacturing sector remained firmly entrenched in contraction territory in November as firms struggle with weak demand and competitive pressure, highlighting ongoing challenges for Europe's largest economy, a survey showed on Monday.

The HCOB Germany Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, held steady at 43.0, unchanged from October.

This final reading comes in slightly below a preliminary reading of 43.2 and remains well below the 50-point threshold separating growth from contraction.

While the rate of decline in output and new orders eased slightly, with the latter at its slowest rate in six months, employment, output prices and export sales quickened their fall.

"The situation for German industry is looking pretty grim. People are feeling the pinch as reports of companies in the manufacturing sector planning massive job cuts are coming in almost daily," said Hamburg Commercial Bank chief economist Cyrus de la Rubia.

Employment in the sector was scaled back for the 17th consecutive month, with the rate of job cuts accelerating close to September's 49-month record. Nearly 29% of businesses reported reducing staff, reflecting ongoing efforts to align employee levels with falling workloads.

Despite these challenges, there was a slight uptick in business confidence, which turned positive for the first time in three months, though it still remains low by historical standards.

"This could be because of the coalition collapse and the hope that the new government will finally bring about a real economic turnaround. This would involve things like lower energy prices and a reform of the debt brake," said de la Rubia.

Germany is expected to hold snap elections in February after the ruling coalition fell apart last month in a dispute over spending.

"Overall, it looks like the recession in the manufacturing industry will drag on into the new year," he said.

(Reporting by Miranda Murray; Editing by Toby Chopra)