Exports energise German manufacturing as lockdown dampens services: PMI

FILE PHOTO: Employees of German car manufacturer Porsche work on a Porsche 911 at the Porsche factory in Stuttgart-Zuffenhausen, Germany, February 19, 2019. REUTERS/Ralph Orlowski/File Photo

BERLIN (Reuters) – A surge in demand for exports pushed activity in Germany’s manufacturing sector to a 36-month high in February as lockdown measures to contain the coronavirus pandemic pushed the services sector into a deeper contraction, a survey showed on Friday.

IHS Markit’s flash purchasing managers’ index (PMI) of activity in the manufacturing sector shot up to 60.6 from 57.1 in January, beating a forecast for fall to 56.5.

Reflecting differing fortunes in Europe’s biggest economy, activity in the services sector slowed to a nine-month low of 45.9 from 46.7 in January. This was below both the 50 mark separating growth from contraction and a forecast reading of 46.5.

As a result, the flash composite PMI, which tracks the manufacturing and services sectors that together account for more than two-thirds of the German economy, rose to a two-month high of 51.3 from 50.8 the previous month.

Germany went into lockdown in November and restrictions were tightened in mid-December to stem the coronavirus. Most of the measures that shut all non-essential businesses have been extended until March 7 as more contagious variants of the virus led to border controls being imposed with the Czech Republic and Austria.

“Ongoing weakness in services, where large parts of the sector remain either closed or disrupted by virus containment measures, continues to be counterbalanced by strong, export-driven growth across manufacturing,” said Phil Smith, Associate Director at IHS Markit.

He added that the survey had showed record reports of delivery delays and sharply rising input prices, pointing to increasing supply-side pressures.

“Looking further down the line, businesses are growing in confidence about the outlook for activity in the year ahead, with the vaccine roll-out hoped to bring an end to restrictions later in the year and help release pent-up demand,” he said.

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