Germany: Flash PMI strengthens in October and points to solid private sector activity
October 24, 2016
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.”