In March, Germany PMI manufacturing dropped sharply to 44.7, down from 47.6 and missed expectation of 48.0. That’s also the lowest level in 79 months. PMI services dropped to 54.9, down from 55.3 but beat expectation of 54.8. PMI composite dropped to 51.5, down from 52.8, hit a 69-month low.
Commenting on the flash PMI data, Phil Smith, Principal Economist at IHS Markit said:
“The downturn in Germany’s manufacturing sector has become more entrenched, with March’s flash data showing accelerated declines in output, new orders and exports. Uncertainty towards Brexit and US-China trade relations, a slowdown in the car industry and generally softer global demand all continue to weigh heavily on the performance of the manufacturing sector, which is now registering the steepest rate of contraction since 2012.
“The domestic market remains strong, which continues to be reflected in wage pressures and robust growth across the services sector of the economy, but the question is whether it can withstand a protracted downturn in manufacturing. The first decrease in factory employment for three years is perhaps a warning sign for the health of domestic demand, with overall job creation now running at its lowest since May 2016.
“The overall rate of output price inflation has shown little change in March, but this masks starkly different trends at the sector level. The combination of robust domestic demand and wage pressures has seen services charges increase at a rate exceeded only once in the series history, while a near-stagnation in manufacturing input costs is reflected in the weakest rise in factory gate prices in almost two-and-a-half years.”
