German economic growth accelerates at start of Q3
The index reached its highest level in 2016 so far with both manufacturers and service providers reporting stronger expansions. The trend in new business remained positive in July, with companies reporting a nineteenth successive monthly rise in new workloads.
Some panellists commented on particularly strong demand from foreign markets. Indeed, manufacturers reported a solid increase in new export orders, with the pace of expansion the second-best in almost two-and-a-half years.
In an effort to increase capacity at their units, companies continued to hire new staff during July. The current sequence of job creation now stretches to 33 months, with the latest increase the most marked in nearly six years.
Service providers reported a particularly strong rise in employment. With employment levels rising sharply, the rate at which backlogs of work accumulated slowed markedly during July and was only fractional overall.
On the prices front, there was a further pick-up in input cost inflation, with the respective rate of increase the highest since May of last year.
It was the first time in a year that both manufacturers and service providers recorded increased input prices. Anecdotal evidence partly attributed this to higher steel prices, raw material shortages and rising wages. ■