German PMI surges to 6-1/2 year high as manufacturing booms

Germany’s private sector economy ended the third quarter strongly, with business activity growth accelerating to the fastest in almost six-and-a-half years, according to flash PMI survey data from IHS Markit. Improved performances were seen across both manufacturing and services in September, though it was the former that continued to show the much faster rate of expansion.

The IHS Markit Flash Germany Composite Output Index rose for the second month running in September to 57.8, up from 55.8 in August and its highest reading since April 2011. Average growth in the third quarter as a whole was robust but slightly below that seen in quarter two, reflecting the comparatively subdued rate of expansion seen in July.

Further, the IHS Markit Flash Germany Manufacturing PMI recorded a reading of 60.6 in September, up from August’s 59.3, to signaling the sharpest monthly improvement in overall factory business conditions since April 2011.

Germany’s labor market meanwhile continued to reap the benefits of growing workplace activity, with private sector employment rising at a robust pace that was broadly in line with the average seen across the year so far. Notably, the rate of job creation in the goods-producing economy was the fastest seen for more than six years.

"The powerhouse manufacturing sector again put in the stronger performance, though services also perked up in September to elevate the overall pace of expansion to the best seen since early-2011. IHS Markit’s forecast of 0.7 percent GDP growth in the third quarter, therefore, remains well within the realms of possibility," said Phil Smith, Principal Economist at IHS Markit.

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