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Monday, June 14, 2021

Germany May flash manufacturing PMI 64.0 vs 65.9 expected

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Latest data released by Markit/BME – 21 May 2021

  • Prior 66.2
  • Services PMI 52.8 vs 52.0 expected
  • Prior 49.9
  • Composite PMI 56.2 vs 57.1 expected
  • Prior 55.8

A bit of a mixed report as the manufacturing sector cools off a little while services start to pick up, with the services print at a 10-month high. Manufacturing output was a bit of a drag – it is still high historically – but supply disruptions are clearly weighing.

Markit notes that:

“May saw a welcome pick-up in services activity
across Germany, as firms reported a rise in
demand across the sector for the first time since the
retightening of lockdown measures last October.
The improved performance in services comes at a
crucial time, making up for a further loss of
momentum in manufacturing due to worsening
supply issues.

“While the demand picture for manufacturing
remains positive, we are getting more reports from
businesses of supply shortages curbing production
levels and weighing on new orders due to forced
downtime at customers. On top of this, there is also
the issue of an associated surge in costs, with
supply shortages pushing up factory input prices in
May at a rate that easily surpasses anything seen
before in the manufacturing survey’s 25-year
history. Inflationary pressures are increasingly
spreading to services as well, pushing the overall
measures of input costs and output prices both to
record highs.

“The survey suggests that the surge in operating
expenses is having implications for staff
recruitment, with some manufacturers reporting
efforts to control costs despite growing demand.
Nevertheless, with backlogs rising at a near-record
rate as demand continues to outstrip supply, and
firms still strongly confident about future activity,
there remains a positive attitude towards hiring.”

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