Germany: Composite PMI rises in May
Operating conditions in Germany’s private-sector economy expanded at a stronger pace in May, with the IHS Markit composite Purchasing Managers’ Index rising to 56.2 from 55.8 in April. Consequently, the index moved further north of the neutral 50-threshold that separates expansion from contraction in business conditions.
The uptick came on the back of a return to growth in the services sector due to the easing of restrictive measures buoying demand. Demand dynamics were buttressed by firming new business inflows at home and a near-stabilization in foreign new work. On the other hand, conditions in the manufacturing sector eased in the month on the back of greater supply-side disruptions. Growth of new manufacturing orders remained strong, but output moderated. Improved demand dynamics and outstanding work led to an overall increase in job creation. Supply-side disruptions, moreover, also drove an acceleration in inflationary pressures. Overall cost inflation was the strongest on record. Greater input prices were passed on to the customer, with output price inflation rising at the strongest pace since September 2002—the earliest available comparable data.
Phil Smith, associate director at IHS Markit, commented:
“May saw a welcome pick-up in services activity across Germany, as firms reported a rise in demand across the sector for the first time since the retightening of lockdown measures last October. The improved performance in services comes at a crucial time, making up for a further loss of momentum in manufacturing due to worsening supply issues.”