Tuesday, October 01 09:51:49
Germany's manufacturing sector expanded for the third straight month in September, a survey suggested today, which may help Europe's largest economy post decent growth in the third quarter.
Markit's Purchasing Managers' Index (PMI) for the German manufacturing sector, which accounts for around one-fifth of the economy, stood at 51.1 in September, down from 51.8 in August.
The reading was nonetheless above the 50 mark separating growth from contraction for a third consecutive month. It was at its second-highest level since July 2011, though the final number was slightly lower than the flash estimate of 51.3.
"Germany's manufacturing sector looks to have expanded at a reasonably solid pace through the third quarter of the year, despite growth momentum easing in September," said Tim Moore, senior economist at Markit.
"A robust performance from investment goods producers helped sustain manufacturing growth, while the main drag was from weaker consumer goods production," he added.
German manufacturing had a weak start to the year and though it picked up towards the end of the April-June period, the only hard data available for the third quarter has pointed to industrial orders and output falling in July.
The PMI survey showed factories churning out more goods for a fifth straight month in September and taking on more orders for the third month in a row, though the rate of expansion slowed in both cases compared with the previous month.
Firms' order books held more new contracts from abroad for a second straight month but the rise was less marked than in August. Slower order growth led to factories running down their backlogs of work.
Weak European demand has hit major German firms. Volkswagen announced in September it would step up its overseas operations to counter weak demand in Europe.
Manufacturers cut jobs for a sixth straight month as demand from emerging markets, which many German firms had looked to as a strong alternative given weak euro zone demand, remains muted.
Investment goods factories, however, hired staff at the fastest rate since January 2012 and in another positive sign, firms' margins were bolstered by an increase in factory-gate prices for the first time since March and a drop in input costs.
The German economy, which steamed ahead during the early years of the euro zone crisis, weakened last year but bounced back in the second quarter of 2013. Economists generally expect slower but nonetheless decent growth in the July-September period. ( C ) Reuters