Germany: Flash PMI hits five-month high in May
May 23, 2016
Markit’s composite Purchasing Managers’ Index (PMI) rose from 53.6 in April to 54.7 in May. The reading marked the highest result in five months and the composite PMI—the result of a survey of over 1,000 manufacturing and service businesses based in Germany—moved further above the 50-threshold, where it has been since April 2013.
The print reflected somewhat higher PMI readings for both service providers and manufacturers, which hit a three-month and a five-month high, respectively. While the fact that output growth registered the first pickup this year so far comes as positive news, other sub-indices gave some reason for caution. For example, new work weakened, expanding at the slowest pace in 10 months, mainly reflecting external headwinds.
Markit commented on the result, stating that, “a first look at today’s survey results is encouraging, as output growth accelerated for the first time in 2016 so far. However, we should not be too complacent about these numbers and should instead view them with some caution. There was evidence that some companies raised activity levels in order to process backlogged work, rather than as a result of rising new business. Although new order intakes continued to increase, the rate of growth was the weakest in 10 months, with occasional mentions from panellists of an increasingly challenging demand environment. There was also an interesting development on the prices front. Input prices rose for the first time this year so far, as the higher oil price and rising staff costs (partly linked to staff shortages) exerted some upward pressure on costs. However, businesses were reluctant to raise their selling prices in a sign of increasing competitive pressures.”