Markit/BME Purchasing Managers’ Index, October 2011
At 49.1 in October, down from 50.3 in September, 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 – fell for the sixth month running and was the lowest since July 2009. The latest reading was also below the neutral 50.0 mark for the first time in 25 months.
The overall deterioration of business conditions in Germany mainly reflected lower levels of output and new business during October. Although production volumes only fell marginally, it was the first reduction since June 2009. Anecdotal evidence suggested that weakening client demand, shortages of outstanding work and efforts to prevent a build up of inventories had all contributed to lower output in the latest survey period.
New business intakes in the manufacturing sector dropped for the fourth month running in October, and the rate of contraction was the fastest since June 2009. Latest data also pointed to a sharp and accelerated reduction in new export orders, with the pace of decline the steepest for almost two-and-a-half years. Reports from survey respondents attributed softer market demand to uncertainty about the economic outlook, which in turn encouraged destocking policies and delays to spending decisions among clients.
October data pointed to a much steeper fall in backlogs of work than was the case during the previous month. Companies that reported a decrease in unfinished business generally attributed it to lower underlying demand and a corresponding increase in spare capacity at their plants. Reduced workloads also led to a moderation in jobs growth for the third month running in October. Higher levels of employment have been recorded continuously since April 2010, but the latest increase was the weakest for a year.
Manufacturers in Germany reported a solid decline in purchasing activity in October, reflecting efforts to realign inventories with lower workloads. Some firms also noted that improved supplier delivery times had allowed them to run down the safety stocks they had built up in the first half of 2011. This was highlighted by a drop in pre-production inventories for the second month running. Although relatively modest, the latest fall was still the most marked since February 2010. Anecdotal evidence also cited efforts to optimise working capital as one of the reasons for streamlining stocks in October. However, inventories of finished goods increased marginally and for the third month in a row, which is the longest uninterrupted period since the start of the survey in April 1996.
Average input prices declined in October for the first time in almost two years. Survey respondents commented on lower costs for a range of raw materials, particularly steel and copper. Meanwhile, prices charged by manufacturers in Germany increased only marginally and at the slowest pace since March 2010. Factory gate price inflation has now eased for four consecutive months amid intense competition for new business and lower cost pressures in the manufacturing sector.
Quelle: Markit/BME e.V.
