German manufacturing PMI hits 3-month high in September

Final seasonally adjusted Markit/BME Germany Manufacturing Purchasing Managers’ Index (PMI) hit a 3-month high in September, suggesting that Germany’s manufacturing sector ended the third quarter on a positive note.

Data released earlier today showed that September PMI for manufacturing, which accounts for about a fifth of the economy rose to 54.3, up from August’s 53.6. Data was in line with forecasts. The PMI average reading for Q3 as a whole stood at 53.9, the highest quarterly reading since the start of 2014.

Solid expansion in output and new orders is seen as key driver of the stronger PMI reading. The pace of expansion in new business was among the fastest seen over the past two-and-a-half years. New export orders expanded at the strongest rate since early-2014.

Firms increased production and hired staff at a pace not seen since the start of 2012. Inventories fell at the strongest rate in over 6-1/2 years, suggesting manufacturers are likely to further increase output in coming months to replenish stock.

“Although the official measure for industrial output pointed to a surprisingly sharp decline of production in July, IHS Markit predicts growth for the remainder of the quarter. Industry should therefore have a positive contribution to GDP growth in the third quarter.” said Oliver Kolodseike, Economist at IHS Markit