IHS Markit/BME Germany Manufacturing PMI
German manufacturing conditions continue to improve markedly
The German manufacturing sector continued to grow at the strongest rate in over six years mid-way through 2017, according the June PMI survey data from IHS Markit and BME. Overall operating conditions improved at the strongest pace since April 2011. Moreover, the 12-month outlook for production remained strongly positive. Meanwhile, input prices rose at the slowest pace in seven months, albeit one that remained strong overall.
The headline IHS Markit/BME Germany Manufacturing PMI is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of the sector.
The PMI rose for the sixth time in seven months in June, posting 59.6, up from 59.5 in May. This signalled the strongest overall improvement in manufacturing business conditions in Germany since April 2011. The upward movement in the PMI reflected a faster rise in new orders and a greater lengthening in supplier delivery times, while growth of output and employment remained strong despite easing slightly since May. The current 31-month period of overall growth in the goods-producing sector is the second-longest in the 21-year survey history.
The volume of new orders received by German manufacturers increased at the fastest rate since March 2011 in June. The rate of expansion has accelerated six times in the past seven months.
That said, the rate of growth in new export business eased from May’s seven-year high.
Production growth was only fractionally slower than May’s 73-month record. The current 50-month sequence of continuous expansion in output is the longest observed since the survey began in April 1996. By sub-sector, the sharpest increase was registered in the investment goods category.
There was a further marked increase in manufacturing employment in Germany in June. The rate of job creation was little-changed from May’s six-year high. Despite this expansion in capacity, backlogs of work increased at the fastest rate since April 2011.
Purchasing activity rose at the second-fastest rate in over six years in June. This placed additional demands on suppliers, whose delivery times lengthened to the greatest extent since April 2011. This subsequently pressurised manufacturers’ input stocks, which declined at the sharpest rate in nine months.
Average input costs continued to rise sharply in June, linked to greater raw material prices. That said, the rate of inflation slowed further to a seven-month low. Output price inflation quickened and was the second-fastest since July 2011.
Output expectations strengthened in June. The degree of sentiment was the sharpest since January 2014, and the second-best in the five-year series history. Some firms forecasted stronger demand from Asian and Middle Eastern markets.