German private sector companies reported further growth of output at the end of the third quarter.
The pace of expansion slowed slightly since August, but remained above the long-run series average. This was highlighted by the seasonally adjusted Markit Flash Germany Composite Output Index falling from 55.0 to 54.3. Nevertheless, the average reading for the third quarter as a whole was the best over a calendar quarter since Q3 2014. Manufacturers and services providers both reported slightly weaker growth of output. Despite a marginally weaker rise in private sector activity, companies signalled accelerated growth of new business in September.
The rate of increase was the most marked since November 2013, with panellists commenting on a positive economic environment and improved demand from both the domestic and foreign markets. Manufacturers reported a second successive monthly rise in new export orders. Following the trend that started nearly two years ago, private sector employment in Germany rose in September. Moreover, the rate of job creation accelerated fractionally since August and was the strongest since December 2011.
Survey participants generally linked increased workforce numbers to higher business requirements. Meanwhile, business outstanding rose for the second month running in September. The rate at which backlogs of work accumulated was the most marked in 52 months. According to anecdotal evidence, increased new orders and capacity pressures accounted for much of the latest rise in work outstanding. Inflationary pressures eased slightly in September, with input and output prices both rising at weaker rates. Input costs rose only marginally, with goods producers signalling the steepest drop in input prices since January. Manufacturers attributed the decline to lower prices for energy, oil and some raw materials.
Meanwhile, service providers reported a further increase in input costs. German manufacturing companies remained cautious about their stock policies in September, with both pre- and post-production inventories declining further. Meanwhile, suppliers’ delivery times continued to lengthen, albeit only marginally. Service sector companies reported optimism towards the 12-month outlook for activity in September. However, the level of positive sentiment fell from August’s four-month high. Companies expecting activity to grow over the course of the next year commented on new customers, increased capacities and higher investments
