German Factory Activity Rises to 6.5-year High in October

• German Factory Activity Rises to 6.5-year High in October

German factory activity expanded further in October as demand continues to grow.

The Manufacturing Purchasing Managers’ Index grew 60.6 in the month, higher than the initial flash read of 60.5 and well above the 50 level that separates expansion from contraction.

“The German manufacturing sector has started the fourth quarter where it left off in the third, recording strong growth in production and adding more new jobs to the economy,” said IHS Markit economist Phil Smith.

He added: “The rate of job creation reached the best in six-and-a-half years in October as goods producers looked to expand output capabilities to meet rising demand both at home and abroad.”

Also, rising demand has pushed backlogs to 33 months high, and October increase was the second highest since April 2011. Another indication of surging new orders and growing productivity.

While business confidence going forward dipped slightly, manufacturers’ growth expectations remained positively strong. This, experts predict would further deepen business confidence and enhance job creation.

“Although remaining elevated by historical standards, firms’ confidence towards future performance dipped slightly in October to a seven-month low, perhaps another tell-tale sign that the sector’s growth is close to terminal velocity,” Smith said.

The Euro remains fairly stable across board following the report.