Germany October flash manufacturing PMI 58.2 vs 56.5 expected

Latest data released by Markit/BME – 22 October 2021

  • Prior 58.4
  • Services PMI 52.4 vs 55.0 expected
  • Prior 56.2
  • Composite PMI 52.0 vs 54.0 expected
  • Prior 55.5

It’s all about supply and capacity constraints as well as surging cost pressures, as German business activity falls to its slowest in eight months.

Of note, the rate
of increase in charges for goods and services hit a
survey-record high. That highlights strong inflationary pressures and in turn is dampening business and consumer sentiment going into year-end.

Looking at the details, the manufacturing output index fell to a 16-month low with new orders also slumping heavily amid a shortage in chip supply. That is offset by the more resilient factory export orders on the month. Markit notes that:

“October’s flash PMI data point to economic activity
in Germany beginning to plateau at the start of the
fourth quarter. Growth has slowed to a modest
pace, with supply bottlenecks holding back
manufacturing production and the rebound in
services activity continuing to lose momentum, in
part due to supply issues spilling over to the sector.

“Worryingly, the slowdown in growth has coincided
with a re-acceleration in rates of increase in
businesses’ input costs and output prices. The
survey’s price gauges had looked to have peaked
back in the summer, but recent surges in energy
and fuel prices have helped stoke inflationary
pressures, with firms raising charges to cover
against higher costs in record numbers in October.

“October saw another robust rise in employment as
firms look to try to catch up with demand and curb
rising backlogs of work. Should the current trend in
hiring continue, it may feed through to higher wages
as workers’ bargaining power increases.

“We saw a divergence in the expectations of
service providers from those of manufacturers, with
the latter growing increasingly concerned about
supply chains issues, which are expected to
continue well into 2022.”

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