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Manufacturing sector in Germany shows sustained strong growth at start of 2018

Staff Writer | February 2, 2018
Germany’s manufacturing sector enjoyed a strong start to 2018, despite seeing a softer pace of growth than the record performance in December, according to the latest PMI survey data from IHS Markit and BME.
Manufacturing sector in Germany
Germany   IHS Markit/BME Germany Manufacturing PMI
Price pressures were meanwhile shown to be the highest since early-2011, driven by rising commodity prices and capacity constraints in supply chains.

The final IHS Markit/BME Germany Manufacturing PMI – a single-figure snapshot of the performance of the manufacturing economy – registered 61.1 in January, down from a surveyrecord high of 63.3 in December but still signalling one the greatest improvements in overall business conditions since the survey began in 1996.

Although easing to a three-month low in January, the rate of output growth at German factories remained strong and faster than at any other time since April 2011.

Furthermore, there were sharp increases in overall production levels across each of the three main industry groupings covered by the survey: consumer, intermediate and investment.

Echoing the trend seen in output, the rate of new order growth moderated from December’s recent peak but remained marked overall.

This was likewise the case for export sales, which showed the smallest gain since August last year, but still rose sharply in the context of the longer-term trend.

Capacity pressures remained a feature in the latest survey, with a further steep rise in backlogs of work IHS Markit / BME Germany Manufacturing PMI during the month highlighting the degree strain on factories.

Goods producers raised employment levels accordingly, with January seeing a steep increase in payroll numbers that continued the best sequence of job creation seen since 2011.

Supply chains were also stretched during the month, with manufacturers noting a considerable increase in average delivery times for purchased items.

The extent of the deterioration in supplier performance was one of the greatest on record, surpassed only by that seen a month earlier.

Manufacturers’ stocks of purchases increased for a seventh straight month in January amid attempts to safeguard against delivery delays.

Although slightly weaker than in December, the rate of accumulation remained solid and among the fastest ever recorded by the survey.

Stocks of finished goods, on the other hand, returned to contraction, having rose slightly and for the first time in eight months in December.