Germany: Flash PMI moderates but remains in expansionary territory in April
April 22, 2016
Markit’s composite Purchasing Managers’ Index (PMI) moderated from 54.0 in March to 53.8 in April. The reading marked the lowest result in nine months, yet the composite PMI—the result of a survey of over 1,000 manufacturing and service businesses based in Germany—still remains above the 50-threshold, where it has been since April 2013.
The reading mainly reflected that a somewhat weaker PMI reading for service providers more than compensated for slightly higher manufacturing PMI reading. In fact, while the services sub-index fell to a six-month low, the manufacturing index hit a three-month high. While output growth slowed slightly in April, new business and new export orders grew at a faster pace and employment continued to rise.
Markit commented on the result, stating that, “the German private sector economy is continuing its unspectacular expansionary trend at the beginning of the second quarter. Although growth remained uninspiring and the headline PMI dropped to a ninemonth low, the index was down only fractionally since March and is still indicative of modest growth. On a more positive note, new business levels and employment both rose at slightly stronger rates and the manufacturing PMI emerged from near-stagnation in February and March to a three-month high. The upturn in the goods-producing sector was supported by stronger demand, especially from foreign markets, and a return of employment growth. Moreover, it seems as if deflationary pressures are beginning to bottom out, with input costs falling only marginally and output prices rising. This development should provide some modest cheer to eurozone policy makers after the currency union’s official CPI measure showed that prices were unchanged in March.”