Markit's Germany Manufacturing Purchasing Managers Index (PMI) was at an 18-month low of 55.9 in June, down from 56.9 in May. The decrease stemmed from a further slowdown in the rate of expansion in new orders, which posted the weakest monthly rise since March 2016.
June data showed that expansion in output remained solid while it slowed down at the end of the second quarter due to producers’ less optimistic anticipations about production in the next year. However, the rate of job creation in the manufacturing sector picked up to a four-month high owing to capacity increase efforts.
“The rate of growth of Germany’s manufacturing sector has consistently slowed throughout the first half of 2018, with June’s final headline PMI reading the lowest seen for one-and-a-half years. The question is whether there is worse still to come. Order book growth has consistently been below that of output in recent months, and in June the gap widened as the former slowed to the weakest seen for over two years, suggesting some underlying downward pressure on output levels. Firms have indeed become less optimistic in their expectations towards output, with tariffs seen as an added headwind to growth in the months ahead,” stated Phil Smith, principal economist at IHS Markit.