Germany: Private-sector activity continues to expand moderately in February
Germany’s private-sector economy continued expanding at a modest pace in February, with the composite Purchasing Managers’ Index (PMI), produced by IHS Markit, inching down to 51.1 from 51.2 in January. The headline figure, however, remained above the neutral 50-threshold signaling an overall increase compared to the prior month.
The fractional drop in the headline figure reflected a slight easing of economic activity in the services sector, while the downturn in the manufacturing sector moderated. Within the goods-producing sector, output, new orders and employment fell at softer rates; this came despite weakness in foreign demand and sentiment linked to the outbreak of the coronavirus in China and the wider region. The coronavirus also weighed on supplier delivery times, which deteriorated notably in the month. In the services sector, new orders rose on the back of strengthening domestic demand, as new exports orders fell.
Looking at prices, output price inflation for both sectors eased to a three-and-a-half year low as manufacturing output prices were cut at the steepest pace in more than a decade. On the other hand, input price inflation picked up. This was mainly due to another strong rise in service sector price pressures.
Phil Smith, principal economist at IHS Markit, commented: “Reports from surveyed businesses indicate that, so far, disruption to manufacturing production from supply issues has been fairly limited, but these are still early days in what could potentially be a lengthy saga.”