Germany PMI Manufacturing dropped -64.0 in May, down from 66.2, below expectation of 65.8. PMI Services jumped to 52.8, up from 49.9, above expectation of 52.0. PMI Composite rose to 56.2, up from 55.8.
Phil Smith, Associate Director at IHS Markit said: “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.”
