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Manufacturing in Germany accelerates, services sector slows

Staff writer ▼ | June 24, 2016
The steady growth path of Germany’s economy continued at the end of the second quarter, with the Markit Flash Germany Composite Output Index posting 54.1.
Manufacturing in Germany
German business   Markit Flash Germany PMI
Despite falling slightly from May’s 54.5, the index was broadly in line with the average over the current 38-month sequence of expansion and indicative of moderate growth.

June data signalled an acceleration in new business growth at German private sector companies. Some panellists attributed the latest expansion to a positive economic environment, while others specifically commented on rising demand from overseas markets.

Indeed, manufacturers reported the strongest increase in new export orders for almost two-and-half years. Survey participants commented on higher new business from a range of different countries, including China and the U.S.

Growth trends in both output and new business diverged by sector, however. In particular, slower expansions in the service sector contrasted with accelerated growth at goods-producers, with the Manufacturing PMI reaching its highest level since early-2014.

With overall new business intakes rising further, companies were encouraged to continue adding to their payrolls in June. Moreover, the rate of job creation was the most marked in 2016 so far, with both manufacturers and service providers reporting stronger growth.

There was a rebound in backlogs of work in June, with the level of unfinished work rising during the month. Moreover, the rate at which work-in-hand accumulated was the strongest in six months.