German manufacturing activity remains weak, but outlook brighter: S&P Global

GERMAN manufacturing activity continued to shrink overall in February, but output rose for the first time in nine months as supply-chain bottlenecks showed signs of easing, a survey released on Wednesday (Mar 1) showed.

S&P Global’s final Purchasing Managers’ Index (PMI) for manufacturing, which tracks about a fifth of Germany’s economy, fell to 46.3 in February, from 47.3 the month before. This was the lowest figure in three months, and stayed below the level of 50 that points to growth in activity. 

However, the financial information company saw some encouraging signs.

Phil Smith, economics associate director at S&P Global Market Intelligence, said: “The easing of supply-chain pressures is not only underscored by a record improvement in delivery times, but also by (the) first drop in purchase prices in nearly two-and-a-half years, as the pendulum of pricing power swings back in the direction of buyers.”

While there were positives on the supply side, demand remained under pressure, with new orders continuing to fall, said the report.

The German manufacturing PMI has languished below the 50 mark since July. Analysts polled by Reuters had forecast a February reading of 46.5, in line with an earlier flash estimate.

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Manufacturers were slightly more optimistic about the outlook than in January, marking a fourth straight month of improvement in sentiment, S&P Global’s report showed.

“Hopes for lower inflationary pressures helped brighten the outlook among German goods producers in February, although expectations are yet to return to the level prior to Russia’s invasion of Ukraine,” Smith said. REUTERS