Fading supply problems ease downturn in German manufacturing -PMI

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The final S&P Global Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of Germany’s economy, rose to 47.1 from 46.2 in November.

While it was the third month-on-month increase in a row, the index is still below the 50 mark, which means that activity continues to shrink, albeit at a slower pace.

A Reuters poll of analysts had pointed to a December reading of 47.4, in line with an earlier flash reading.

“The survey indicated a better availability of materials, and with it a reduction of the reduction in production,” which led to some of the gloom surrounding the lifting of the sector, said Phil Smith, Associate Director of Economics at S&P Global Market Intelligence.

Price pressures have also picked up slightly with the improvement in material availability. The input price index was the lowest since November 2020, although above the pre-pandemic average.

“Still, rapidly declining new orders remain an issue for many manufacturers, particularly producers of intermediate goods (ie those who make components for other businesses), with high stocks being just one of the factors weighing on -demand,” Smith said.

New orders were in contraction territory for the ninth consecutive month in December, due to stock levels as well as higher levels of market uncertainty and a marked increase in prices.

(Reporting by Miranda Murray; Editing by Hugh Lawson)

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