Key takeaways
The final German Manufacturing PMI for August was up at 52.2 from July’s final 49.0. The figure was less upbeat than originally thought in August, as it came 0.8 points below its flash estimate corresponding to the consensus. The New Orders improved sharply at 59.1 alongside Future Output (Expectations) at 60.8. However, some weaknesses remain as factory jobs were cut again although the rate of job shedding was the weakest in five months. This indicates that a reversal could happen as the initial Business output and confidence upturn observed in July-August comes following the plunge in Q2. The mechanical “rise from the abyss” effect may fade out in the coming months and the recovery may peter out if the underlying drivers of growth – i.e. domestic demand and external demand – do not live up to their current expectations.
| PMI | Output | New Dom. Orders | New Export Orders | Future Output | Employ- ment | Orders Backlogs | Stocks: Purchases | Input Prices | Output Prices | |
|---|---|---|---|---|---|---|---|---|---|---|
| 03/20 | 45.4 | 41.0 | 39.9 | 35.8 | 27.8 | 43.0 | 41.0 | 48.5 | 41.3 | 45.3 |
| 04/20 | 34.5 | 19.7 | 21.0 | 18.7 | 27.9 | 37.2 | 26.1 | 52.1 | 42.4 | 45.4 |
| 05/20 | 36.6 | 31.7 | 25.9 | 24.5 | 34.9 | 36.5 | 26.8 | 49.3 | 40.9 | 46.5 |
| 06/20 | 45.2 | 46.6 | 45.1 | 41.4 | 52.9 | 38.8 | 37.6 | 48.7 | 43.3 | 46.5 |
| 07/20 | 51.0 | 54.7 | 59.6 | 54.8 | 56.5 | 37.2 | 50.5 | 44.9 | 44.0 | 49.7 |
| 08/20 | 52.2 | 57.7 | 59.1 | 55.7 | 60.8 | 40.2 | 54.2 | 43.3 | 47.7 | 49.4 |
Output and demand
Output index showed the strongest expansion in production since February 2018. This is compounded by a steep rise in incoming new orders, following a similarly strong figure in July, which was mostly accounted for by the Consumer and Intermediate sectors. Export orders followed suit albeit with a less impressive rate of increase.
Employment
German Factories continued to shed jobs in August. However, backlogs of work rebounded sharply which could signal a later rebound in employment.
Subsector Analysis :
| PMI | Output | New Dom. Orders | New Export Orders | Future Output | Employ- ment | Backlogs of orders | Stocks: Purchases | Input Prices | Output Prices | |
|---|---|---|---|---|---|---|---|---|---|---|
| Consumer | 54.5 | 58.5 | 61.4 | 47.9 | 57.4 | 45.3 | 49.2 | 46.5 | 47.5 | 50.0 |
| Intermediate | 54.8 | 62.6 | 65.3 | 59.2 | 65.5 | 41.4 | 57.1 | 39.5 | 47.2 | 50.3 |
| Investment | 48.9 | 51.0 | 53.3 | 51.7 | 58.5 | 37.8 | 49.8 | 44.9 | 48.2 | 47.5 |
- The Consumer Goods PMI for August came at an 19-month high amid strong and accelerated growth in output. New orders rose sharply despite renewed decline in export sales. Factory job losses eased as confidence towards future output continued to improve.
- The Intermediate Goods PMI achieved the largest gain since late-2017. Firms cut jobs again but reported highest output expectations for over two-and-a-half years
- The Investment Goods PMI came is disappointing
