Germany: Flash PMI moderates but points to expansion in January
January 22, 2016
Markit’s composite Purchasing Managers’ Index (PMI) edged down from December’s 17-month high of 55.5 to 54.5 in January. Nevertheless, the composite PMI—the result of a survey of over 1,000 manufacturing and service businesses based in Germany—remains comfortably above the 50-threshold, where it has been since April 2013.
January’s slight decrease was driven by weaker PMI readings for both manufacturers and service providers. In fact, both PMIs dropped to a three-month low. Total new business expanded at a broadly stable pace while new export orders’ growth decelerated in January. Employment also continued to rise, even though the rate of job creation slowed slightly. Firms increased staffing levels in order to boost capacity against the backdrop of higher workloads. Backlogs of work rose for a sixth consecutive month. As for price developments, for the first time in nearly a year input prices fell, largely owing to lower prices for energy and oil. Conversely, output charges increased, albeit at the slowest pace in nearly a year.
Markit commented on the result, stating that, “Germany’s private sector economy was largely unaffected by the recent stock market turmoil and intensifying uncertainty stemming from the so-called migrant crisis at the beginning of the year, according to latest survey results. Although the headline index […] fell to a three-month low, the latest reading was higher than the 2015 average and indicative of robust, although unspectacular, growth of the German economy. Looking at the underlying data highlights that companies should remain in expansion mode in coming months.”