Germany: Composite PMI jumps to almost three year high
February 21, 2017
The Markit Flash Composite Purchasing Managers’ Index (PMI) jumped to 56.1 in February, up from 54.7 in January and the highest mark since April 2014. 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 surge was driven by stronger PMI readings for services and manufacturing, the latter coming in at an almost six-year high. In February, output and new orders continued to grow. As a result, German companies continued to hire new workers at a fast rate, which did little to slow the pace of growth in backlogs of work. Input prices increased for the sixth month running, principally as a result of higher commodity prices and a weak euro. Output prices also increased, reaching an almost six-year high as producers passed on higher input prices to customers.
IHS Markit commented that, “the latest PMI data are encouraging following the slightly weaker-than-expected preliminary estimate of GDP growth in Q4 2016 […]. That said, this figure was influenced by strong imports and could understate underlying momentum. The latest PMI adds to our expectations that economic growth will strengthen in the first quarter.”
Author: Christopher Mc Innes, Economist