Markit/BME Germany Manufacturing PMI
Manufacturing PMI sinks to 25-month low as exports fall the most in over five years.
Growth of Germany's manufacturing sector slowed in September, subdued by the steepest drop in new export orders in over five years, the latest PMI survey data from IHS Markit showed. Production levels exhibited their smallest gain since April 2016, while business confidence towards the year-ahead outlook for output was the gloomiest for over three years.
September saw the headline IHS Markit/BME Germany Manufacturing PMI – a singlefigure snapshot of the performance of the manufacturing economy – sink to a 25-month low of 53.7 from 55.9 in August. The fall in the index reflected slower growth in output, new orders and employment, as well as a reduction in the incidence of supplier delivery delays. The only positive directional influence was from stocks of purchases, which showed a marginal rebound following a slight drop in August.
Inflows of new orders at German manufacturers rose only fractionally in September, with the latest increase being in the weakest in the current 46-month sequence of growth. The slowdown was largely due to a drop in new orders from abroad, which fell for the first time in over three years and to the greatest extent since June 2013. Broken down by main industrial groupings, the data showed that the decline in demand in September was largely centred on the capital goods sector (which includes machinery & equipment and transport), where there were falls in both total orders and exports sales following strong growth in August.
Growth in output levels remained quicker than that of new orders but also eased during the month, down to the weakest in nearly two-and-a-half years. The rate of job creation across the manufacturing sector meanwhile decelerated to the slowest since February 2017, though it remained elevated by historical standards.
Owing to sustained strong growth in workforce numbers, combined with the near stagnation in new order inflows, manufacturers were able to reduce backlogs of work for the first time in over three-and-a-half years in September.
September's survey meanwhile indicated a softening of German goods producers' confidence in regards to future output. Although firms on balance still believed production would grow in the year ahead, the degree of optimism was at its lowest since May 2015 amid uncertainties surrounding the US-China trade war and Brexit negotiations.
Elsewhere, September data signalled a moderation in the rate of input cost inflation in the manufacturing sector for the fourth month in a row, down to its weakest for a year. That said, the latest rise in average purchase prices was steep overall, with panellists commenting on increases in the cost of energy, basic metals (particularly steel) and metal products. Goods producers raised output charges, accordingly, with the rate of inflation ticking down slightly since August but remaining strong.
Supply chains remained under pressure in September, though the latest increase in lead times was the least marked since March 2017.