German manufacturing PMI returns to expansionary territory

FXStreet (London) Germany’s manufacturing sector showed signs of a return to growth in December with the seasonally adjusted Markit/BME Germany Manufacturing Purchasing Managers’ Index printing at 51.2, up from November’s 17-month low of 49.5. The latest index reading was indicative of a modest improvement in operating conditions. New orders returned to growth in December, thereby ending a three-month period of contraction.

The Markit report cautions that the latest rise was only marginal overall and well below levels seen earlier in the year. Firms reported increased new business from both domestic and foreign markets. Indeed, the rate of new export order growth was the strongest in four months. Panel members commented on higher demand from a range of regions, including Europe, Asia and the US.

Commenting on the survey data, Oliver Kolodseike, economist at Markit and author of the report said: “Some relief was offered by December’s survey results, as the PMI edged back into expansion territory and new orders returned to growth. Moreover, companies scaled up their production levels and hired additional workers in order to meet higher business requirements. However, it is too early to say whether or not the manufacturing economy has entered the fast lane again or whether the uptick in the data is just a temporary bright spot.

“With oil prices at levels not seen since 2009, input costs fell further in December. The accelerated drop in input prices is a positive development for manufacturers, but adds to fears of wider disinflationary pressures in the coming months, with a possibility of inflation in Germany dropping further from the recent low of 0.6%.”
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