Germany’s private sector grows solidly at start of Q2
The pace of expansion stabilised after having slipped to eightmonth low in March, according to the latest PMI survey data from IHS Markit.
The rate of job creation picked up to its highest for three months; however, there was less optimism among businesses towards the outlook for activity in the year ahead amid a further slowdown in new order growth.
April saw the IHS Markit Flash Germany Composite Output Index tick up to 55.3 from 55.1 in March.
The latest reading pointed to a solid overall rate of business activity growth that was above the survey’s long-run average (since January 1998), with rates of expansion in both manufacturing output and services activity picking up slightly since March.
The IHS Markit Flash Germany Manufacturing PMI meanwhile registered a reading of 58.1 in April.
Although little-changed from March’s 58.2 and pointing to another strong monthly improvement in overall manufacturing sector performance, this was the lowest reading since July 2017.
The level of new orders received by German private sector firms rose at the slowest rate for more than a year-and-a-half in April.
New business in the service sector showed the smallest gain since August last year, while growth of manufacturing order books eased for the fourth month running to the slowest since November 2016.
Moreover, goods producers reported a further slowdown in new export order growth to a 16-month low.
Firms’ optimism towards the year-ahead outlook for activity meanwhile weakened further from the record highs seen in the second half of 2017.
A notable deterioration in future expectations among services firms saw the survey’s measure of overall business confidence to dip to its lowest since last November.
The degree of optimism among manufacturers meanwhile improved slightly from an 18-month low in March.
There was positive news on the employment front in April as the rate of private sector job creation rebounded from March’s seven-month low to its highest since January.
This reflected a faster rise in service sector workforce numbers – the secondquickest in the past year.
Manufacturing employment growth, however, eased to the slowest for eight months.
April survey data meanwhile indicated another solid monthly increase in average prices charged for goods and services.
The rate of inflation was unchanged from that recorded in March and remained among the quickest seen over the past seven years.
Driving average selling prices higher in April was a further steep rise in firms’ input costs.
Businesses continued to comment on staff pay pressures and higher prices paid for raw materials, with the latter often linked to supply shortages and bottlenecks.
That said, having eased for the third month in a row, the rate of input cost inflation was at its lowest since last September.
Capacity constraints in supply chains were meanwhile reflected in a further marked increase in average delivery times for inputs.
The extent of the deterioration in vendor performance was less marked than March’s survey-record, but still one of the greatest in the 22-year series history. ■