Markit/BME Purchasing Managers’ Index, February 2011
The seasonally adjusted Markit/BME Germany Purchasing Managers’ Index (PMI) – a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy – rose from 60.5 in January to 62.7 in February, indicating the sharpest overall improvement in German manufacturing sector business conditions since the survey began in April 1996. All five components of the PMI made stronger positive contributions to the headline figure in February. The index has posted above the neutral 50.0 mark in each month since October 2009 and the latest reading signalled a further acceleration from the eight-month low registered last September.
February data pointed to a steep upturn in manufacturing production levels, extending the current period of expansion to twenty months. The rate of growth picked up to the fastest since April 2010 and was the second-strongest in the survey history. All three market groups recorded an acceleration of output growth, with investment goods producers continuing to register the fastest pace of expansion.
Stronger output growth reflected another surge in new business intakes during February as improving global economic conditions resulted in increased client demand. The pace of new business expansion accelerated for the fourth time in the past five months and was the steepest since July 2010. This was supported by another robust rise in new orders received from abroad. Increased intakes of new export work were seen in all three market groups, with companies in the investment goods sector continuing to outperform consumer and intermediate goods producers.
Higher production requirements and efforts to raise operating capacity resulted in another steep rise in workforce numbers. The pace of manufacturing sector job creation reached a survey record high for the third month running in February, with employment growth particularly strong in the intermediate and investment goods sectors. Measured overall, staffing levels have now increased for eleven successive months.
Manufacturers in Germany reported a rapid rise in average cost burdens, with the rate of inflation accelerating sharply to the steepest in almost fifteen years of data collection. This in turn resulted in the most marked increase in factory gate charges since January 2007. Anecdotal evidence pointed to increased costs for a wide range of raw materials, including chemicals, industrial metals and plastics. Survey respondents frequently cited the impact of increased global demand for commodities and an associated squeeze on the availability of inputs from suppliers.
Delivery times for raw materials lengthened sharply in February, with vendor performance deteriorating at the fastest pace since July 2010. Purchasing activity meanwhile rose at the quickest rate for ten months as manufacturers sought to raise output levels and increase their stocks of inputs. Highlighting attempts by some firms to build safety stocks, latest data showed a rise in pre-production inventories for the eleventh month running. Index Summary (seasonally adjusted, 50 = no change on previous month)
The Markit/BME Purchasing Managers’ Index (PMI) is a composite indicator designed to provide an overall view of activity in the manufacturing sector and acts as a leading indicator for the whole economy. The indicator is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of goods purchased. A reading of the PMI below 50.0 indicates that the manufacturing economy is generally declining; above 50.0, that it is generally expanding. A reading of 50.0 signals no change. The greater the divergence from 50.0, the greater the rate of change signalled by the index. Purchasing Managers’ Index and PMI are registered trademarks owned by the Markit Group.
