Industrial Purchasing Manager Index of Germany remains negative in June

by David Fleschen

The slowdown in export demand, combined with the weakening automotive industry, has weakened German industrial production in June. This is confirmed by the latest survey results on the IHS Markit / BME Purchasing Manager Index (EMI). Although the key leading indicator for the manufacturing industry of Europe's largest economy, at 45.0 points, was above the May level in May (44.3), it remained at one of its lowest levels since 2012. It is already the sixth month in a row the PMI below the growth threshold of 50.0 points, said the English financial services provider IHS Markit.

"At first glance, the current EMI data continue to paint a rather negative picture of the German industrial sector. Although the production rate of the industry has shrunk further, there are also positive tendencies, "emphasized Dr. Silvius Grobosch, Managing Director of the Federal Association of Materials Management, Purchasing and Logistics e.V. (BME) on Wednesday in Eschborn. For example, EMI sub-indices for new orders, new export business and employment recovered slightly from the lows of recent months. "What's also pleasing to our buyers is that procurement prices have dropped again in June due to supplier discounts," Grobosch added.

"International trade conflicts and the problems in the automotive sector still weigh on German industry. The EMI continues to be correspondingly weak, "Dr. Gertrud R. Traud, chief economist of Helaba Landesbank Hessen-Thüringen, on Wednesday at BME request the current EMI data. However, the glimmer of hope would become more apparent, especially in the consumer goods industry. While foreign trade was unlikely to contribute to growth this year, German GDP would receive strong momentum from consumption and construction. "Thus, a growth of about 1 percent is possible," said the Helaba Bank Director finally BME.

"The alarm signals in the German economy are increasing. Numerous drag factors, from international trade disputes to Brexit and Italy to the overall global slowdown, are giving companies a critical look into the future, "said Dr. Ulrich Kater, chief economist of DekaBank, on Wednesday the BME. The starting point for the problems in the German economy is the export-dependent manufacturing sector. But the longer the external economic weakness persists, the more it engulfs the domestic economy.

"The air is getting thinner in German industry. Above all, the uncertainties in international trade are reflected in the order books of the companies noticeable, "said DIHK foreign trade expert Kevin Heidenreich on Wednesday the BME. According to the AHK World Business Outlook, economic policy framework conditions and trade barriers increasingly restricted the business of German companies abroad. Increasing protectionism is causing a slowdown in the global economy, and is putting pressure on the strongly export-oriented German economy. "New EU trade agreements with the Mercosur states or Vietnam are therefore an important step for German companies towards greater reliability in world trade," said Heidenreich.

Commenting on the recent development of the EMI Heinz-Jürgen Büchner, Managing Director of Industrials, Automotive & Services of IKB Deutsche Industriebank AG, said to the BME on Wednesday: "A whole range of metallic and energetic raw materials have recently become cheaper again, but for the second half of the year there is a turnaround in the price level to count. For some metals, stock reduction has continued vigorously and supply deficits are emerging for the current year, such as aluminum, zinc or copper. "This could give prices a boost. Crude oil, on the other hand, is largely dependent on further calming geopolitical conflicts in the Gulf region, with currently good supply overall. "Therefore, with crude oil, other temporary high rashes are possible," predicted Büchner.

Source: BME, Photo: Fotolia

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