Germany PMI October 2016

Germany

Germany: Flash PMI strengthens in October and points to solid private sector activity

The Markit Flash Composite Purchasing Managers’ Index (PMI) rose from 52.8 in September to 55.1 in October. 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.

The pickup was driven by better PMI readings for both service providers and manufacturers. The manufacturing PMI climbed to the highest value since January 2014 while the services PMI reached the highest level in three months after it had plunged to an over three-year low in September. In October, output continued to rise and new orders grew at the fastest pace since the beginning of this year. New export orders, employment and backlogs of work also grew. An increase in both input prices and output charges suggests an increase in inflationary pressures.

IHS Markit sees the result as strong sign that, “The German economy has entered the fast lane again at the start of the fourth quarter […]. The improvement in the PMI in October lifts hopes that the weaker expansions we have seen in the past two months were just a temporary soft patch, rather than the beginning of a serious slowdown. […] Moreover, the data signal that domestic fundamentals are strong, with demand for German goods and services increasing sharply and companies adding to their payroll numbers to the greatest extent in just over five years.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 2.5% in 2016, which is unchanged from last month’s forecast. For 2017, panelists expect fixed investment to grow 1.9%, which is up 0.1 percentage points from last month’s projection.


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Germany PMI Chart


Germany PMI October 2016

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 IHS Markit.


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