German factory growth
reaches close to three-year high in December: PMI
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[January 02, 2017]
(Reuters) - German manufacturing growth reached its highest in almost
three years in December, driven by rising demand from Asia and the
United States, a survey showed on Monday, suggesting the sector will
contribute to an expansion in the fourth quarter.
Markit's Purchasing Managers' Index (PMI) for manufacturing, which
accounts for about a fifth of the economy, rose to 55.6 from 54.3 in
November to reach its highest level in 35 months.
That was slightly above a flash reading and well above the 50 line that
separates growth from contraction.
"Strong growth in December meant that goods producers enjoyed their best
quarter in nearly three years during Q4," Markit economist Philip Leake
said. "The manufacturing sector is therefore likely to help overall GDP
growth accelerate from the modest 0.2 percent pace seen in the third
He added that companies reported solid improvement in domestic demand as
well as new business wins in Asia, Europe and the United States.
"There were also encouraging signs for further growth in 2017. Companies
look set to hire in an effort to raise operating capacity, following the
sharpest increase in backlogs of work since early-2014," Leake said.
Expansions of output and new orders underpinned the overall improvement
in conditions, Market said, noting that new business increased for the
25th consecutive month with the rate of growth just below the record
over that period.
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A woman is pictured at work at the Ford Fiesta assembly line in
Cologne, Germany January 6, 2016. REUTERS/Wolfgang Rattay
Responding to the rising demand, manufacturers raised their output at a
quicker pace. The rise in production was the highest since July, it
Inflationary pressures also increased in December. Input costs rose at
the fastest pace since June 2011. The weaker euro helped to drive up
import costs, Markit said.
The survey was another positive sign after Ifo's closely watched
business climate index showed last month that morale among executives
rose in December to its highest level since February 2014.
The economy grew 0.7 percent in the first quarter and 0.4 in the second.
For the year, economic institutes predict a growth rate of 1.9 percent,
mainly driven by soaring private consumption and higher state spending
Detailed PMI data are only available under license from Markit and
customers need to apply to Markit for a license.
To subscribe to the full data, click on the link below: http://www.markit.com/Contact-Us
(Reporting by Joseph Nasr, editing by Larry King)
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