Purchasing Manager Index: Coalition inspires business

Highest level for 15 months / domestic demand also stronger

Frankfurt, 3.1.2006    The upward trend in the German industry continued in December, a indicated by the seasonally adjusted RBS/AMMPL Purchasing Manager Index (Issue January 2006), which, in comparison to the previous month, rose from 52.7 to 53.6 and thus the highest level for 15 months. Values above 50 mean growth, value under 50 weakness.

Buoyed by the strongest increases in orders since August 2004, many companies considerably expanded their production. The higher volume of incoming orders was, in part, attributable to the increase in domestic demand. Companies reported that, after conclusion of the coalition negotiations between CDU/CSU and SPD, the motivation among industrial clients to invest more than previously was on the rise.

The demand for German industrial products from the Euro zone, the USA and Asia continued on a sustained robust level. Business enterprises recorded a solid plus in December; however, in comparison to previous months, growth fell off slightly (from 55.5 to 55.1).

Particularly manufacturers of advance performance and capital goods were able to record, in comparison to previous months, considerable increases in growth. Manufacturers of consumer goods limited their production; however, their increases in incoming orders and order backlogs, as well as lower inventories, indicate production increases in the coming months.

Purchase prices were on the highest level for 9 months. This was attributable to synthetic materials, oil, metals and energy, as well as packaging components (paper, cardboard).

The „RBS/AMMPL Purchasing Manager Index“ (PMI) is a monthly early indicator of the forecast economical trend in Germany. The index has been published since 1996 under the auspices of the Association Material Management, Purchasing and Logistics (AMMPL) of Frankfurt, Germany. It is prepared by the British Research Group NTC Research, Henley-on-Thames and sponsored by the Royal Bank of Scotland (RBS). The index is based on polling of 500 purchasing managers or managing directors from the processing industry in Germany (representatively selected for the German economy by branch, company size and region). The PMI is oriented along the lines of its role model, the US Purchasing Manager’s Index (PMI).