German factory growth reaches 6-year high

BERLIN: German manufacturing growth reached its highest level in more than six years in June, driven by a sharp increase in orders, a survey showed on Monday, suggesting factories will contribute to an expansion in the second quarter.

Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the economy, rose to 59.6 from 59.5 in May to reach its highest level in 74 months.

That was higher than a flash reading of 59.3 and well above the 50 line that separates growth from contraction.

“German manufacturers turned out another impressive performance in June with the PMI rising for the sixth time in seven months to the highest since April 2011,” said Markit economist Trevor Balchin.

He added: “The latest PMI data therefore strongly suggest that the manufacturing sector will continue to boost German GDP in the second quarter.”

High input prices, which are seen as a threat to the momentum in the sector, eased in June, Markit said.

Input price inflation fell from April’s 71-month record to the weakest since November 2016.

However, it remained higher than the long-run survey average mainly because of higher raw material prices.

Data last week showed German consumer inflation had accelerated unexpectedly in June driven by higher costs for food and services. — Reuters