July saw a further pick-up in the rate of growth of Germany’s private sector economy from a 20-month low in May to a five-month high, driven by a stronger increase in manufacturing output.
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New order growth also gathered pace, seeing the steepest rise for four months.
Private sector firms continued to add staff at a marked rate, while price pressures intensified.
The IHS Markit Flash Germany Composite Output Index rose to 55.2 in July from 54.8 in June, to signal a second successive monthly acceleration in the rate of growth in private sector business activity.
The implied expansion was the fastest since February, but remained below the strong trend shown over 2017.
By sector, services business activity increased at a solid rate that was little-changed from June, while manufacturing output growth was the fastest since April.
The IHS Markit Flash Germany Manufacturing PMI improved to a three-month high of 57.3 in July, from 55.9 in June.
The rise in the index reflected stronger increases in output, new orders and stocks of purchases, as well as a greater incidence of supply chain delays.
Manufacturing employment rose at a pace little-changed from June, remaining historically strong.
Total inflows of new business rose at the fastest rate for four months in July.
Behind this acceleration was stronger demand in the goodsproducing sector, where growth recovered from June’s 27-month low.
In the detail, the manufacturing survey showed that new export orders increased at the fastest rate in three months.
Meanwhile, new business in the service sector increased at a rate little-changed from June’s five-month high.
The July survey indicated a sustained strong pace of hiring across the private sector.
The rate of job creation was unchanged from June’s five-month high, and remained strong in the context of historic data.
Moreover, employment growth remained sharp across both manufacturing and services.
Despite the sharper rate of growth in output in July, business confidence towards the year-ahead outlook for activity remained relatively subdued.
The Future Output Index was at its second-lowest level in 20 months, remaining well below the highs seen in 2017.
Data showed conflicting trends at the sector level, with improved sentiment among manufacturers contrasting with a waning of service providers’ confidence to the lowest since December 2016.
Price pressures intensified in July.
Input price inflation accelerated for the third month running to the highest since January, widely linked to higher wages and fuel.
In addition, manufacturers highlighted increased steel prices, as well as supply shortages emanating from China which drove up prices in general.
Average output prices rose at the fastest rate in five months in July.
Charges rose at similarly marked rates in the manufacturing and services sectors.
Notably, service providers increased their charges at the second-fastest rate ever recorded, just short of the all-time high seen in September 2000. ■