Germany PMI August 2016


Flash PMI drops but remains robust in August

Markit’s composite Purchasing Managers’ Index (PMI) decreased from 55.3 in July to 54.4 in August. The PMI—the result of a survey of over 1,000 manufacturing and service businesses based in Germany—has remained above 50, the threshold indicating expansion, since April 2013.

A weaker PMI reading for services providers was mainly behind August’s overall drop. In fact, activity in the services sector recorded the lowest increase in 15 months. The manufacturing PMI also fell, dragging on the Composite PMI, albeit to a lesser extent. Output, new orders, and employment all grew at a slower pace than in July, but still performed solidly overall. As for price developments, input costs and output charges both continued to rise.

IHS Markit commented on the result, stating that, “the long-standing theme of solid economic growth in Germany continued in August and based on the survey data available for the third quarter so far, we should expect further steady GDP growth. It is unlikely that the 0.7% pace from the beginning of the year will be repeated, however.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 2.8% in 2016, which is unchanged from last month’s forecast. For 2017, panelists expect fixed investment to grow 2.0%.

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Germany PMI Chart

Germany PMI August 2016 2

Note: Markit Purchasing Managers’ Index (PMI) Composite Output. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: BME and HIS Markit.

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