Germany: Composite PMI rises to six-month high in February
The IHS Markit Composite Purchasing Managers’ Index (PMI) came in at a six-month high of 56.2 in February, up from January’s 53.8. As such, the index moved further above the 50-threshold, signaling a stronger improvement in business conditions from the previous month.
The headline improvement came chiefly on the back of strengthening in the services sector, as the Services PMI rose to a six-month high of 56.6 in February (January: 52.2). Within the sector, new inflows of work rose at the strongest pace since September last year, with new export orders chipping in as well. However, job creation growth lost steam in February, and input cost inflation intensified due to costlier energy and fuel, and greater wage bills. Subsequently, output prices rose at the second-highest pace on record.
Meanwhile, the Manufacturing PMI stood at 58.5 in February, down from January’s 59.8, amid reports of Covid-19 hampering production due to staff absences. More positively, new orders growth accelerated for the second month running, partly due to strong export growth. While goods producers took on more staff in the month, they failed to meet requirements: Backlogs of work rose at a steep rate in February. Input price pressures also rose in the manufacturing sector for the same reasons and due to costlier materials.
Analysts at the EIU added:
“As 2022 progresses, the release of pent-up demand will help to lift private consumption, although the normalisation of retail and services activity will remain prone to setbacks as new coronavirus variants continue to emerge. Supply-chain disruptions are likely to continue in the first half of 2022, constraining industrial production and export growth, and keeping the costs of energy, materials and transport elevated. We expect an improvement later in the year as frictions in global trade ease and greater domestic production of components, such as semiconductors, comes on stream.”