Germany: Composite PMI hits record high in July
July 23, 2021
The IHS Markit Composite Purchasing Managers' Index (PMI) came in at 62.5 in July, up from June's 60.1, and marking the highest level since January 1998. As such, the index remained entrenched well above the 50-threshold, with business conditions improving at a faster clip than in the previous month.
The jump in the headline reading came on the back of a large improvement in the services sector, while the manufacturing PMI increased only slightly. Within services, the easing of Covid-19 restrictions likely buoyed customer-facing businesses. In the manufacturing sector, although orders increased at a faster pace, production was stymied by shortages of materials, with record increases in backlogs of work. Turning to prices, input cost inflation fell from the prior month’s record high but remained elevated. This was partly passed on to customers, with output price inflation also staying at elevated levels.
Phil Smith, associate director at IHS Markit, commented:
“Businesses are less confident in regards to growth prospects over the coming year, which in some ways is to be expected as activity in the economy gets closer to pre-pandemic levels, but it also hints at concerns towards supply-side disruption and doubts about how quickly the remaining restrictions can be lifted. Still, in the context of series history, expectations for now remain highly positive, and this optimism continues to help drive a strong rebound in employment levels.”
Author: Jan Lammersen, Economist