The German industrial sector shrank again in February

by David Fleschen

The German industrial sector shrank again in February. The pace of the reverse gear has increased, according to the latest results of the IHS Markit / BME Purchasing Manager Index (EMI) survey. The key leading indicator for the manufacturing industry slipped to its lowest level since December 2012, with 47.6 points down from 49.7 in January, the main reason for the downtrend was a continued decline in new orders and a significant drop in production levels, according to EMI survey respondents.

"After the EMI has fallen below the magic 50-point threshold again, we are faced with the question of whether it is just a dip in the economy or already the beginning of a downturn," Dr. Silvius Grobosch, Managing Director of the Federal Association of Materials Management, Purchasing and Logistics e.V. (BME) on Tuesday in Eschborn.

"The EMI will be weak again in February. Presumably, the discussion about car taxes has caused uncertainty in German industry, "commented Dr. Gertrud R. Traud, chief economist of Helaba Landesbank Hessen-Thüringen, on Tuesday at BME request the current EMI data. Although this topic is not yet off the table, there were clear signs of recovery regarding other aspects. The expansive monetary and fiscal policy in China has already provided an economic brightening there. The chances are still high that the US and China could settle their trade dispute or even bring tariff reductions. "The strong rise in the stock market will also boost the mood among companies in Germany. So there are also messengers for an economic spring in Germany ", said the Helaba Bank Director.

"Industry in Germany is in a slight recession, while macroeconomically, such a recession has been avoided thanks to strong service providers. This does not seem to be going well in the first quarter, looking at the purchasing manager indices, "Dr. Ulrich Kater, chief economist of DekaBank, on Tuesday the BME.

"The worries in the industry are deepening. In particular, the development of demand is increasingly a risk from the companies' point of view, "explains Emanuel Weishäupl, Head of the Unit for Foreign Trade and Development Policy of the DIHK. The trade disputes and Brexit weighed on exports. "At home, too, worries are growing in view of the high bureaucratic and tax burdens and the need to modernize the infrastructure," said Weishäupl on Tuesday to the BME.

Commenting on the recent development of the EMI sub-index purchase prices, Dr. Ing. Heinz-Jürgen Büchner, Managing Director of Industrials, Automotive & Services at IKB Deutsche Industriebank AG, told the BME on Tuesday: "Even in the course of February 2019, the prices of a number of plastics have risen. During this time, the prices of several materials also increased. Crude oil prices are currently stabilizing around $ 65 per barrel of Brent. In the case of ethylene, propylene and benzene, contract prices for March 2019 were currently up significantly. We assume that most of these are passed through the supply chain. This is all the more so as supplies in some plastics could become scarcer in the second quarter of 2019 as a result of maintenance. As a result, attractive plastics prices are expected in the coming months. "
Source: BME, Photo: Fotolia


Go back