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The seasonally adjusted Markit Flash Germany Composite Output Index rose marginally from September’s 54.1 to 54.3 in October, thereby extending the current sequence of private sector output growth to a year-and-a-half. When asked to comment on activity growth, panellists often mentioned higher order intakes and new contract wins.
Encouragingly, manufacturing growth picked up in October, with the pace of expansion the fastest in three months. However, growth remained well below the levels seen at the start of the year. Meanwhile, services output rose at a slightly weaker, albeit still robust, rate.
German private sector companies reported a further rise in new business in October, but the rate of growth in new work eased for the fifth month running and was the weakest in just over a year. While some panellists linked slower growth to the Russian sanctions and increased competition, higher new export business and the introduction of new products supported the overall rise.
Manufacturing orders stabilised in October, having fallen in the previous month. With activity and new orders rising further, companies were encouraged to hire additional workers. The rate of job creation in the goodsproducing sector was the strongest in nearly three years, but service sector employment growth was the weakest for seven months.
As has been the case since May, German private sector firms were able to further reduce their backlogs and partly linked this to weaker new order growth. However, the rate at which work outstanding fell was only marginal. Input prices continued to increase during October, largely driven by higher staff costs in the service sector. Manufacturers, on the other hand, reported a further decline in costs. That said, the overall rate of cost inflation picked up slightly since September. Despite higher input prices, charges fell for the first time since June last year, thereby squeezing on companies’ profit margins. Anecdotal evidence suggested that firms lowered their output prices amid increased competitive pressures
