Germany: Flash PMI improves in November and points to private sector expansion
November 23, 2015
Markit’s composite Purchasing Managers’ Index (PMI) edged up from October’s 54.2 to 54.9 in November. As a result, the composite PMI—the result of a survey of over 1,000 manufacturing and service businesses based in Germany—remains above the 50-threshold, where it has been since April 2013.
November’s increase was driven by stronger PMI readings at both service providers and manufacturers. Service providers recorded a sharp increase in activity, recording the fastest expansion in over a year. Conversely, output at manufacturers slowed and grew at the weakest rate in four months. New business picked up in November and recorded the largest expansion in two years. This improvement largely came on the back of service providers, while new business among manufacturers expanded less than in October. Employment continued to rise with the rate of job creation picking up to the fastest pace since December 2011. Backlogs of work grew at a faster rate, reflecting intensified capacity pressures among businesses. Input costs rose only slightly due to lower energy and commodity prices and output charges recorded a modest increase. Inventories decreased compared to October and suppliers’ delivery times tallied the largest increase in 15 months. In November, service providers grew more optimistic regarding the 12-month outlook for business activity, however sentiment rested below this year’s average.
Markit commented on the result, stating that, “private sector output growth in Germany accelerated further in November, partly driven by efficiency improvements and increased new order intakes, according to panel evidence. In fact, the rise in new business was a particularly bright spot in the data set, with the respective pace of expansion the fastest in two years. Moreover, it looks as if businesses will remain busy in coming months: backlogs of work accumulated at one of the strongest rates over the past four-and-a-half years and companies raised their employment levels to the greatest degree since December 2011 in anticipation of higher new business. There was some divergence by sector, however, with accelerated output growth at service providers contrasting with a further slowdown at goods producers. While the Manufacturing PMI edged slightly higher, both output and new orders in the sector rose at marginally weaker rates. PMI data available for the fourth quarter so far point to further modest, albeit unspectacular growth, of the German economy.”