Germany: Composite PMI inches down slightly at the start of Q4
October 24, 2017
The IHS Markit flash composite Purchasing Managers’ Index (PMI) slipped slightly in October to 56.9, down from the previous month’s revised multi-year high of 57.7 (previously reported: 57.8). Nonetheless, the PMI, which is the result of a survey of over 1,000 manufacturing and service businesses based in Germany, has remained above the crucial 50-threshold since April 2013, indicating continued expansion in the private sector.
The result was driven by the fastest rate of expansion of new orders in six and a half years; output growth, however, dropped slightly at the outset of the fourth quarter. Orders of export goods, meanwhile, rose sharply again, signaling healthy foreign demand for German goods. Due to the increasing level of activity, employment rose again in October. The pace of job creation was the fastest since May. Nonetheless, backlogs of work rose again for the 33rd consecutive month, albeit at a slower pace than in the previous month. In terms of prices, inflationary pressures intensified as input prices rose for the fourth consecutive month to the highest level since April, which was passed on to customers.
Phil Smith, Principal Economist at IHS Markit, commented that, “The fundamentals remained strong and the economy has carried robust growth momentum into the closing stages of the year.”
Author: Jan Lammersen, Economist