Markit/BME Germany Manufacturing PMI
Manufacturing PMI reaches record high in December.
Germany’s manufacturing sector ended a strong year with a further pick-up in performance in December, according to the latest PMI survey data from IHS Markit and BME. Production growth reached a level not seen since early-2011, buoyed by one of the fastest rises in new export orders ever recorded in the survey’s near 22-year history. An associated increase in demand for raw materials meanwhile led to greater pressure on supply chains, with delivery delays found to be the worst on record.
The headline IHS Markit/BME Germany Manufacturing PMI – a single-figure snapshot of the performance of the manufacturing economy – climbed to an all-time high of 63.3 in December from 62.5 in November, surpassing the previous highest reading recorded in February 2011 (62.7).
Production of goods rose sharply at the end of the fourth quarter, with the rate of growth having accelerated for the second month running to the fastest seen for almost seven years. The broadbased increase in output was led by an especially sharp expansion in the investment goods sector.
Production levels were raised in line with a further steep increase in inflows of new orders. Notably, the level of new business received from abroad rose at the joint-fastest rate in the survey history, with anecdotal evidence highlighting Asia, the US and fellow European countries as strong sources of new orders for German manufacturers.
Expansion in the manufacturing sector was also reflected in a further rise in the level of employment, as goods producers sought to improve capacity amid a near-record increase in backlogs of work. Although the pace of job creation eased slightly from November’s 80-month high, it still pointed to a marked overall rise in factory workforce numbers.
December also saw a further pick-up in manufacturers’ purchasing activity, with the rate of growth up sharply since November to the fastest since April 2010. Firms reported raising buying levels to not only support higher production, but also to build safety stocks amid supplier delays and lack of availability of inputs. Stocks of purchases rose for the sixth month running and at the fastest rate since June 1998.
On the supply front, lead times for inputs increased in December to the greatest extent in more than two decades of data collection. The survey evidence largely attributed this to capacity constraints among both suppliers and across the transport sector.
Input costs meanwhile rose sharply on average in December, driven mainly by higher prices paid for raw materials such as steel and other metals. This in turn led to another steep rise in prices charged by manufacturers, with the rate of inflation down only slightly from November’s six-and-a-half year high.
Finally, December’s survey indicated a recovery in manufacturers’ confidence towards future growth prospects, up from an 11-month low in November to the highest since June.