German manufacturing industry hits 29-month high: Markit
Germany’s manufacturing industry reached its highest level since June 2011, as the euro area’s largest economy continues to gain traction. Germany’s manufacturing PMI, courtesy of Markit Group, rose to 54.5 in November, up from 52.9 the prior month.
The monthly snapshot shows Germany’s private sector continues to lead euro area growth; higher business volumes and faster gains in new work were the main catalysts behind the November expansion. New export work advanced at the fastest pace since February, despite weak demand throughout the euro area. Higher business volumes and greater export demand weren’t able to spur job creation, as workforce numbers fell for the eighth consecutive month. However, work backlogs rose at the sharpest rate in two-and-a-half years, which could provide strong impetus for hiring in the coming months.
Expansion wasn’t limited to the manufacturing industry. The service economy reached a nine-month high on the strength of new business, which rose for the fifth consecutive month. This represents the longest expansion since 2010-11.
“November’s survey suggests that the German economy has built up a head of stream through the final quarter of 2013 and is well on track to achieve growth of close to 0.5 [percent] for the calendar year,” said Tim Moore of Markit Group.
The same optimism wasn’t extended to the broader euro area, which witnessed a broad slowdown in services. The euro area PMI Composite Index fell 0.4 percentage points to 51.5. The currency region is mired in turmoil, as the European Central Bank continues to mull over unconventional policy tools in a last-ditch effort to avoid deflation. Euro area inflation hit a four-year low in October, leading ECB officials to consider negative deposit rates. Implementing a negative deposit rate would put the ECB at odds with the German Bundesbank, which has repeatedly warned against looser monetary policy.
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