Germany PMI

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Germany: Flash PMI moderates but remains in expansion mode in December

December 16, 2015

Markit’s composite Purchasing Managers’ Index (PMI) edged down from November’s eight-month high of 55.2 to 54.9 in December. 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. In addition, Markit highlighted that, “the average PMI reading for the fourth quarter as a whole is the best since Q2 2014.”

December’s slight decrease was driven by a weaker PMI reading at service providers, while the manufacturing PMI inched up marginally and hit a four-month high. Output at both manufacturer and service providers decelerated slightly in December. New business also slowed slightly, but nevertheless recorded one of the fastest expansions in four years. Meanwhile, new export orders grew at a roughly steady pace and recorded the fifth expansion in a row. Employment registered a sustained expansion and the pace of job creation reached a four-year high, particularly due to strong growth in the private sector. Outstanding business also continued to rise, reflecting that higher staffing levels were not enough to ease capacity pressures. Regarding price developments, input costs rose slightly at service providers while they fell at manufactures, partly on the back of lower prices for oil and energy. Output charges continued to increase, even though at the softest pace in 11 months. Service providers remained optimistic about the outlook for the next year.

Markit commented on the result, stating that, “Germany’s private sector companies ended the fourth quarter on a solid footing, with all key barometers of corporate health showing further improvements. While output and new orders increased at slightly weaker rates, growth remained above their respective long-term trends. The labour market was a particularly bright spot, according to December’s flash PMI results. The rate of jobs growth reached a four-year high, highlighting greater confidence about upcoming workloads. Moreover, the impressive improvement in employment has been fuelled by one of the most marked expansions in new business since 2011. That said, higher employment levels were unable to alleviate pressure on capacity, as backlogs of work continued to rise strongly. The average Composite Output Index reading for the fourth quarter as a whole is the best in one-and-a-half years. The data therefore point to an acceleration of GDP growth from the 0.3% seen in the third quarter.”

Met the why particular Consensus Forecast panelists expect fixed investment to expand 2.7% in 2016, which is down 0.2 percentage points from last month’s forecast. For 2017, panelists expect fixed investment to grow 2.9%.


Author: Teresa Kersting, Economist

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Germany PMI December 2015

Note: Markit Purchasing Managers’ Index (PMI) Composite Output. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: BME and Markit.


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