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Manufacturing growth surges to fastest since early-2011 in Germany

Staff Writer | October 3, 2017
German manufacturing saw its strongest growth performance for over six years in September, recording marked and accelerated increases in both production levels and employment.
German manufacturing
Germany   IHS Markit/BME Germany Manufacturing PMI
This is according to the latest PMI survey data from IHS Markit and BME.

However, there was also evidence of increasing supply-side pressures, as firms faced near-record delivery delays and sharply rising input costs.

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.

At 60.6 in September, up from August’s 59.3, the final IHS Markit/BME Germany Manufacturing PMI recorded its highest reading since April 2011 and signalled a strong improvement in the overall health of the goods-producing economy.

A faster rate of production growth helped lift the headline PMI higher in September.

Makers of intermediate goods recorded the steepest overall rise in output during the month, although there were also strong positive contributions from the consumer and capital goods sectors.

Survey evidence suggested that stronger demand was the main factor driving the upturn seen at the end of the third quarter.

Overall order books expanded at the fastest rate since June, supported by ongoing steep growth in new business from abroad, and from Asian markets in particular.

It was a similarly positive picture for factory employment in September, with manufacturers upping their rate of job creation to the fastest seen since May 2011.

Despite firms taking on extra workers, data showed ongoing pressure on operating capacity, as backlogs rose at the fastest rate seen for over seven years.

With manufacturers demanding greater volumes of inputs in order to support higher production, the strain on supply chains also intensified during the month.

Incidences of delivery delays on purchased items were in fact among the most widespread since data collection began in 1996.

In turn, supply shortages helped drive up average prices paid for inputs, including chemicals and a range of metals, with the rate of cost inflation at a five-month high.

The combination of strong cost pressures and supportive demand conditions led to the greatest hike in prices charged since mid-2011.