Markit/BME Germany Manufacturing PMI
Manufacturing PMI slips to nine-month low in April.
Germany’s manufacturing sector made a solid start to the second quarter, with output rising markedly and at a quicker pace than in March. However, the rate of production growth remained well below the highs seen at the turn of the year, and both new order inflows and job creation continued to wane from their recent elevated levels.
A further marked increase in input lead times meanwhile continued the worst sequence of delivery delays faced by manufacturers in over two decades of data collection, with supply chain constraints also contributing to sustained strong price pressures.
The headline IHS Markit/BME Germany Manufacturing PMI – a single-figure snapshot of the performance of the manufacturing economy – dipped to 58.1 in April, down fractionally from 58.2 in March and its lowest reading for nine months. However, despite dropping for a fourth straight month from a record-high last December, the index remained well above its long-run series average (52.4) and at a level indicative of a marked improvement in overall operating conditions.
April saw a robust increase in German factory output levels. The rate of expansion accelerated slightly from that seen in March, though it remained slower than at any other point over the past 16 months. Intermediate goods producers noted the steepest rise in production, while there were also solid increases in output across the consumer and investment goods sectors.
New order growth meanwhile slowed for the fourth month running to the lowest since November 2016. The rate of increase was solid by the historical standards of the survey but well below the highs of late-2017.
It was a similar picture for the pace of job creation across the manufacturing sector, which moderated for the fifth month in a row from a near seven-year high last November. Still, the latest increase in employment was marked as firms continued their efforts to expand capacity in line with growing production requirements, with backlogs of work showing a strong sustained rate of accumulation.
Supply chains remained stretched in April, with input lead times again lengthening to one of the greatest extents in the survey’s 22-year history. And with demand for inputs continuing to outstrip supply, April saw a further steep increase in average prices paid for purchases. That said, the rate of inflation eased further from January’s recent peak to the slowest for seven months. Prices charged by manufacturers, on the other hand, increased at a sharp and accelerated rate that was among the fastest seen over the past seven years.
Finally, April’s survey showed a slight pick-up in manufacturers’ confidence towards the yearahead outlook for output from an 18-month low in March. The degree of optimism was above the historical trend, but down on recent elevated levels.