Germany: Composite PMI inches down in April
April 27, 2021
Conditions in Germany’s private sector improved at a slightly softer pace in April, with the IHS Markit composite Purchasing Managers’ Index easing to 56.0 from 57.3 in March. That said, the index remained comfortably above the neutral 50-threshold that separates expansion from contraction in business conditions.
The downtick in the headline print reflected a softer expansion in conditions in both the services and manufacturing sectors. Regarding the former, the recent soft spell in demand continued at the outset of the second quarter amid lingering restrictive measures to curb the spread of Covid-19. Moreover, new work inflows dropped for the seventh month running. On the other hand, outstanding work rose, albeit marginally, in the services sector for the first time in nearly two years due to the postponement of projects. Additionally, job creation was the strongest since before the pandemic on the back of firms planning for greater activity going forward. Turning to the manufacturing sector, demand for goods continued to grow strongly in the month, although new export orders increased at a softer rate. Nonetheless, producers struggled to keep pace with demand, driving strong growth in backlogs of work. This came despite the strongest employment growth since August 2018.
Turning to prices, input price inflation rose at the quickest pace since February 2011 due to supply shortages and limited freight capacity; input costs also rose in the services sector. Output price inflation, meanwhile, increased at an accelerated rate as prices for goods rose at a record high pace.
Phil Smith, associate director at IHS Markit, commented:
“The third wave of the pandemic has stifled progress in Germany’s service sector, with April’s flash PMI data showing activity close to stalling following the return to growth at the end of the first quarter. The country’s manufacturing sector remains on a strong footing, though even here the data show growth being held back by supply problems.”
Author: Jan Lammersen, Economist