FILE PHOTO: Technicians work on the assembly line of German carmaker Volkswagen’s electric ID. 3 car in Dresden, Germany, June 8, 2021. REUTERS/Matthias Rietschel
BERLIN (Reuters) – 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 showed on Wednesday.
S&P Global (NYSE:SPGI)’s final Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of Germany’s economy, fell to 46.3 in February, from 47.3 in January. It marked its lowest level for three months and stayed below the 50 level that points to growth in activity. However, S&P Global saw some encouraging signs.
“The easing of supply chain pressures is not only underscored by a record improvement in delivery times, but also by a first drop in purchase prices for nearly two-and-a-half years, as the pendulum of pricing power swings back in the direction of buyers,” said Phil Smith, economics associate director at S&P Global Market Intelligence.
While there were positives on the supply-side, demand remained under pressure, with new orders continuing to fall, according to the report.
The German manufacturing PMI has languished below the 50 mark since July. A Reuters poll of analysts had forecast a February reading of 46.5, in line with an earlier flash reading.
Manufacturers were slightly more optimistic about the outlook compared to January, marking a fourth straight monthly improvement in sentiment, according to the survey.
“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.