Markit/BME Germany Manufacturing PMI
Manufacturing sector posts near-record growth in November.
Germany’s manufacturing sector saw near-record growth in November, as new orders, exports and employment all rose at rates close to the peaks seen in 2010-11, according to the latest PMI® survey data from IHS Markit and BME. The stronger pace of expansion led to greater pressure on capacity, however, with backlogs growing at the second-fastest rate ever recorded and input delivery delays among the worst seen in the 21-year survey history. Price pressures also heated up, reaching the highest in six-and-a-half years.
The headline IHS Markit/BME Germany Manufacturing PMI – a single-figure snapshot of the performance of the manufacturing economy – moved to 62.5 in November, rising from 60.6 in October. The latest reading was the secondhighest seen since the survey began in April 1996, exceed only by February 2011’s 62.7.
Production levels were ramped up to the greatest extent since April 2011, with each of the main categories of manufacturing (consumer, intermediate and investment) seeing sharp rates of expansion in November.
The upturn in performance was underpinned by strong growth in demand for German goods, with anecdotal evidence also suggesting that the introduction of new products had further enhanced sales. Both total new orders and exports exhibited growth that was best seen since March 2010, and the second-fastest on record.
Manufacturers took on new staff at pace bettered only once (March 2010) in the series history in November. However, despite efforts to expand production capabilities, November saw a continued build-up of backlogs. Furthermore, the rate of accumulation picked up to show one the greatest increases in outstanding business since the series began in late-2002.
Latest data also showed a sharp and accelerated rise in the level of purchasing activity among German manufacturers. In a number of cases firms reported deliberately stockpiling inputs amid growing fears about lengthening lead times. The incidence of delivery delays was in fact among the worst on record, with firms commenting on insufficient supplier capacity and constraints in the transportation sector.
Higher demand for materials and constraints on supply meanwhile manifested in a sharp increase in average prices paid for raw materials and semi-manufactured goods. The rate of cost inflation was the steepest since April 2011. Businesses highlighted steel, plastics and electronic components as some of the items up in price. The pass-through of higher costs by manufacturers saw average output prices rise sharply and at the fastest rate since June 2011.
Elsewhere, November’s survey showed a weakening of firms’ confidence towards the outlook for the second month running. Expectations remained elevated by historical standards but slipped to an 11-month low amid concerns towards capacity and a potential slowdown of the economy.