German manufacturing returns to growth in Dec: PMI

[BERLIN] A boost in new orders helped Germany's manufacturing sector return to growth in December, a survey showed on Friday, fanning hopes for a modest recovery in Europe's largest economy.

Markit's Purchasing Manager's Index (PMI) for the manufacturing sector, which accounts for about a fifth of the economy, rose to 51.2, the same as a flash reading, from 49.5 in November. The November figure was the lowest since mid-2013 and below the 50.0 threshold dividing growth from contraction.

New orders picked up, albeit modestly, after three months of declines, with firms reporting growth in export business and orders from the home market.

"Some relief was offered by December's survey results, as the PMI edged back into expansion territory and new orders returned to growth," said Markit economist Oliver Kolodseike.

"However, it is too early to say whether or not the manufacturing economy has entered the fast lane again or whether the uptick in the data is just a temporary bright spot.

"With oil prices at levels not seen since 2009, input costs fell further in December," he added. "The accelerated drop in input prices is a positive development for manufacturers, but adds to fears of wider disinflationary pressures."

A meagre growth rate of 0.1 per cent in the third quarter helped Germany skirt a recession after a contraction of 0.1 per cent in April-June.

Strong employment, rising wages and low interest rates are helping prop up the economy, which has suffered from uncertainty over the West's confrontation with Russia over Ukraine and weakness in some eurozone partners.

German business morale rose in December for the second month running, according to the closely-watched Ifo index, suggesting the economy is on course to pick up in the fourth quarter.

REUTERS