Markit/BME Purchasing Managers’ Index, June 2011
The slowdown in the German manufacturing sector entered a second successive month during June. This was highlighted by a fall in 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 – from 57.7 in May to 54.6 in June, its lowest level for seventeen months. Although the PMI has fallen almost 7.5 points from the level seen in April, the latest reading was still above the long-run series average (52.3).
June data pointed to much weaker rates of output and new business growth than in the previous month. The latest rise in production levels was the slowest for nine months, with stronger investments goods growth offset by a less marked expansion of consumer goods production and a fall in intermediate goods output.
Manufacturers in Germany mainly linked softer production growth to a moderation in the rate of new business expansion during June. Latest data indicated the weakest improvement in new order books since July 2009. Anecdotal evidence from survey respondents suggested that subdued gains in export orders, alongside renewed economic uncertainty, had led some clients to delay their spending decisions.
New export orders increased only marginally in June, and at the slowest pace in the current twenty-one month period of expansion. Moreover, sector data suggested that investment goods producers were the only market group to receive increased levels of new work from abroad.
The rate of backlog accumulation in the German manufacturing sector eased sharply in June and was the least marked since the start of the upturn in October 2009. Slower growth of unfinished business partly reflected increased production capacity and higher staffing levels in the manufacturing sector. June data pointed to a robust increase in employment, although the rate of job creation hit a seven-month low.
On the prices front, manufacturers indicated that cost inflation continued to ease sharply from the survey-record high seen in February. Although still sharp, the latest rise in average input prices was the weakest since October 2010. Companies that reported an increase in cost burdens generally commented on higher raw material and fuel prices. This in turn resulted in a strong rate of factory gate price inflation during June, with all three market groups recording higher output charges than in May.
Supplier lead-times lengthened at the weakest pace since January 2010. Some firms noted that softer global demand and better availability of components from Japan had helped alleviate supply chain pressures. Nonetheless, manufacturers in Germany continued to raise their pre-production inventories in June, which continued the trend seen throughout the past fifteen months. Growth of input buying meanwhile eased for the second month running and was the slowest since September 2010, largely reflecting the moderation in new business gains seen in June.
Quelle: Markit/BME
