German Manufacturing Sector Recorded Growth in December

German manufacturingAn employee stands beside an industrial printing press in the manufacturing hall of Heidelberger Druckmaschinen AG, in Wiesloch, Germany. Photographer: Martin Leissl

December PMI edges lower, but still rounds off best quarter in one-and-ahalf years, according to Markit Economics report.

Key points:

Flash Germany Composite Output Index(1) at 54.9 (55.2 in November), 2-month low.

Flash Germany Services Activity Index(2) at 55.4 (55.6 in November), 2-month low.

Flash Germany Manufacturing PMI(3) at 53.0 (52.9 in November), 4-month high.

Flash Germany Manufacturing Output Index(4) at 54.0 (54.2 in November), 2-month low.

Private sector companies in Germany enjoyed another month of solid output growth in December, as highlighted by the Markit Flash Germany Composite Output Index remaining comfortably above the crucial 50.0 threshold. Despite falling from November’s eight-month high of 55.2 to 54.9, the average PMI reading for the fourth quarter as a whole is the best since Q2 2014. Output growth slowed fractionally at both manufacturers and service providers.

Mirroring the trend for activity, new business placed with German private sector firms also increased at a slightly weaker rate in December. Nevertheless, the rate of growth in new work was one of the strongest over the past four-and-a-half years. Anecdotal evidence partly attributed the latest rise in new orders to the introduction of new products and improved demand from both the domestic and foreign markets. Indeed, German manufacturers reported a fifth successive monthly increase in new export orders, with the pace of expansion little-changed from November’s 21- month record.

German manufacturing (private sector) companies raised their staffing levels further in December. Moreover, the rate of job creation was the most marked in four years, which panellists linked to strong demand and planned expansions. Employment growth was particularly strong in the service sector.

The latest increase in workforce numbers was insufficient to relieve pressure on operating capacity, however. This was highlighted by a further rise business outstanding. The rate at which backlogs of work accumulated was equal to September’s 52-month record. Input cost inflation in Germany’s private sector remained subdued in December, with latest data signalling only a fractional rise in input prices. A further sharp fall at manufacturers (linked to lower prices for energy, oil and some raw materials) contrasted with a moderate rise at service providers.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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