Germany output growth at near six-year low as manufacturing downturn deepens

According to the report from IHS Markit, March saw private sector business activity in Germany rise only modestly and at the slowest rate for almost six years. The first monthly fall in employment at goods producers in three years meanwhile saw the overall rate of jobs growth ease to the lowest since May 2016. Elsewhere, a backdrop of solid domestic demand and sustained wage pressures drove a near record rise in service sector output prices. This contrasted with the slowest increase in factory gate charges for almost two-and-a-half years.

The Flash Composite Output Index slipped to 51.5 in March, thereby reversing the interim gains seen in January and February (when the index reached a four-month high of 52.8) and signalling the slowest rate of business activity growth since mid-2013. The rate of increase in services sector business activity remained strong and eased only slightly from February’s five-month high. However, the downturn in manufacturing output gathered pace to show the steepest decline since August 2012.

The Flash Manufacturing PMI registered 44.7 in March, down from 47.6 in February and its lowest reading in over six-and-half years. The index has now fallen in 14 of the past 15 months, down from a record high of 63.3 at the end of 2017, with each of the index’s sub-components imparting a negative influence since the previous survey.