Markit/BME Purchasing Managers’ Index, November 2009
German manufacturers indicated robust rises in output and new orders in November, with both rates of expansion accelerating to the fastest since the third quarter of 2007. Growth was supported by improved global economic conditions, which led to a resurgence of new export orders alongside higher spending among domestic clients. Meanwhile, with backlogs increasing for the second month running and the ratio of new orders to inventories at an elevated level, forward-looking survey indicators suggest that firms are set to continue raising output from the depressed levels seen earlier in the year.
At 52.4 in November, up from 51.0 in October, the headline seasonally adjusted Markit/BME Purchasing Managers’ Index® (PMI®) – a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy – signalled a solid improvement in business conditions over the month. The latest PMI reading was the highest since June 2008 and above the neutral 50.0 mark for the second month running. This largely reflected robust output and new order growth, while a sharp rate of job shedding continued to have a negative influence on the headline index.
November data pointed to the fastest increase in manufacturing production since September 2007 and extended the current period of growth to five months. By sector, output rose at the sharpest pace among intermediate and investment goods producers.
New order volumes also increased for the fifth month running in November, with the rate of growth the strongest since August 2007. Anecdotal evidence suggested that improved business confidence and, in some cases, the restocking of inventories among clients supported demand in November. Data pointed to the most marked increase in new export orders for over two years, largely underpinned by improved demand from Asia and Western Europe.
Increased workloads contributed to a second consecutive monthly rise in backlogs during November. Data also indicated the sharpest accumulation of unfinished business since March 2008. Despite the turnaround in backlogs of work, substantial job shedding persisted in November. Lower employment numbers have been recorded continuously since October 2008, with the latest fall linked to low levels of capacity utilisation following the slump in demand earlier in the year.
Purchasing activity increased further in November, which in turn placed pressure on suppliers. Manufacturers indicated the sharpest lengthening of vendor delivery times since March 2008, amid low stocks and shorter working hours at suppliers. Meanwhile, input prices dropped only fractionally and at the slowest rate in the current period of decline. This led to reduced scope for price discounting in the sector, with the latest fall in charges the weakest for eleven months.
