Germany: Flash PMI stable in March, points to modest expansion
March 22, 2016
Markit’s composite Purchasing Managers’ Index (PMI) in March rested at February’s 54.1. The reading marked a stabilization following two months of decline. 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.
The reading mainly reflected that a slightly stronger PMI reading for service providers compensated for a marginally weaker manufacturing PMI reading. In fact, the manufacturing sub-index fell to the lowest level in over a year and now sits just above the 50-threshold. Conversely, the PMI for service providers inched up to a three-month high. While total output grew at a steady pace in March, new business recorded the slowest expansion in eight months, likely dragged down by weaker external demand, particularly from Asia and the U.S. On top of this, new exports orders stagnated. Employment continued to rise, even though the pace of job creation slowed, and outstanding business increased slightly. As for price dynamics, input prices fell for a third straight month, largely owing to low prices for commodities. While manufacturers reduced output charges, service providers increase them.
Markit commented on the result, stating that, “it looks as if momentum in the German economy will remain sluggish in the months ahead, as slowing new order growth was accompanied by the weakest increase in backlogs of work since the summer of last year. […] A closer look at the data highlights a contrasting trend between the manufacturing and service sectors. In the detail, solid activity growth was maintained in the mighty service sector while the manufacturing PMI is now at a level that indicates a near-stagnation of the more export-oriented goods producing sector, with jobs cuts and declining overseas demand weighing on the sector’s performance in particular. The PMI results provide the first complete picture of business conditions over the first quarter as a whole and are indicative of moderate, although unspectacular GDP growth, similar to the rates seen during the last two quarters.”