Growth of manufacturing sector in Germany hits three-year high
Staff Writer |
German manufacturers enjoyed a positive start to 2017, with output, new orders and employment all rising at improved rates.
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As a result, overall operating conditions strengthened substantially.
This was signalled by the seasonally adjusted Markit/BME Germany Manufacturing Purchasing Managers’ Index(PMI) – a single-figure snapshot of the performance of the manufacturing economy – climbing to a three-year high of 56.4 in January.
The acceleration in growth continued a trend observed at the end of 2016 – the index had reached a 35-month peak in December (55.6).
Data broken down by sub-sector highlighted capital goods producers as the best-performing in January.
Nonetheless, growth remained solid in both consumer and intermediate goods. There were multiple reports from panellists of improving client demand in January.
This was reinforced by data, which showed total new orders rising to the greatest extent since January 2014.
Growth of new work was evident both domestically and abroad, with the survey’s measure of new export business hitting a four-month high.
Monitored firms cited China, Russia and the European Union as sources of new work.
Stronger order books led manufacturers to increase their production again in January.
In fact, output growth quickened to a 33-month peak.
Out of the surveyed sub-sectors, investment goods saw the sharpest rise.
The overall improvement in the health of the sector was further underpinned by strong job creation. The pace of hiring was the most marked since August 2011.
A larger workforce failed to alleviate pressure on capacity, however. Backlogs rose for the twentyfourth month in succession.
Purchasing activity also increased sharply, albeit at a slightly slower pace than in December.
Meanwhile, data showed divergent trends with regard to stock holdings.
Whereas pre-production inventories rose slightly, stocks of finished goods were depleted.
Input costs faced by German goods producers continued to rise substantially in January.
The rate of inflation accelerated to a 68-month high, with panellists commenting on a rise in prices for a number of raw materials.