Markit/BME Purchasing Managers' Index, June 2014
Operating conditions in Germany’s manufacturing sector improved further in June, as highlighted by the final seasonally adjusted Markit/BME Germany Manufacturing Purchasing Managers’ Index (PMI) – a single-figure snapshot of the performance of the manufacturing economy – registering above the no-change mark of 50.0. At 52.0, down from 52.3 in the previous month, however, the latest improvement was the weakest since October last year.
June data signalled weaker expansions in output and new orders at German manufacturers, with companies commenting on production adjustments after solid growth was reported at the beginning of the year. Sector data suggested that production rose at intermediate and investment goods producers, but stagnated at consumer goods manufacturers. While output has now increased for 14 successive months, the latest rise was the weakest since September last year. Order intakes meanwhile expanded at the slowest pace in nearly one year.
Client demand from foreign markets also increased at a slower pace, with the pace of expansion easing to only a marginal pace that was the weakest since a fall was recorded in July last year. Where panellists reported higher new export orders, they mentioned China as a source of growth.
With order intakes rising at a slower pace, German manufacturers lowered their purchasing activity for the first time in one year. The rate of decline was, however, only marginal.
Employment in Germany’s goods producing sector was broadly stagnant since the previous month, ending a six-month spell of increasing workforce numbers. Meanwhile, backlogs of work accumulated marginally, following a month of falling work-in-hand.
Following the trend observed since February, input costs faced by German manufacturers fell further during June. The latest decline was, however, the weakest in the current sequence of falling input prices. Some companies reported higher costs, which they attributed to increased raw material prices, but successful price negotiations resulted in the overall decline. Concurrently, selling prices rose for a second consecutive month, with the rate of charge inflation largely unchanged since the previous month.
German manufacturers remained cautious about inventory levels, highlighted by falls in both stocks of purchases and stocks of finished goods. Meanwhile, suppliers’ delivery times lengthened to the greatest extent since January.