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German manufacturing sector growth slows to three-month low

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Growth in German manufacturing was the slowest in three months in May as new orders lost pace, a survey showed on Monday, suggesting one of the main sectors of Europe's largest economy is coming off the boil.

[BERLIN] Growth in German manufacturing was the slowest in three months in May as new orders lost pace, a survey showed on Monday, suggesting one of the main sectors of Europe's largest economy is coming off the boil.

Markit's purchasing managers index (PMI) for manufacturing, which accounts for about a fifth of the German economy, dropped to 51.1 from 52.1 in April. That was above the 50 line separating growth from contraction for a sixth consecutive month but below a preliminary estimate of 51.4.

"Germany's manufacturing upturn appears to be losing its legs again," Markit economist Oliver Kolodseike said. "While the data signalled an overall improvement in manufacturers' operating conditions, output and new order growth were the weakest in 2015 so far."

Companies continued to hire new staff but at a more modest pace, suggesting they were growing more cautious about their headcount against a backdrop of subdued demand. But backlogs rose further, suggesting ongoing pressure on capacity.

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The weak euro and a shortage of some raw materials pushed input prices up to a 37-month high, hinting at inflationary pressures. Some firms managed to pass on those costs by raising prices, although only marginally, Markit said.

REUTERS

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