Market News
May 2, 2013 @ 9:01 am

Germany’s manufacturing sector contracts in April

Germany’s manufacturing sector is continuing to shrink due to declines in output, new orders and employment.

The purchasing manager’s index (PMI) compiled by Market/BME published today shows a drop to 48.1, down from 49.0 in March. A number below 50 indicates contraction, above 50 is expansion.

This means Germany started the second quarter of 2013 with declines and a worsening of overall business conditions. The rate of deterioration was the most since December 2012.

Driving the decline was consumer goods producers which recorded the fastest rate of contraction.
Germany is Europe’s largest economy and the world’s second-biggest exporter after China, so the numbers are cause for concern.

PMI’s from other euro zone economies also disappointed. France, Italy and Spain (the euro zone’s second-, third- and fourth-largest economies) also showed a contraction in manufacturing activity.

The overall euro zone PMI for manufacturing dropped to a four-month low of 46.7 in April from the prior month’s 46.8, but coming in ahead of an earlier flash reading of 46.5.

“There is nothing here to suggest that manufacturing will turn the corner and stabilise any time soon, putting greater onus on policymakers to act quickly to reinvigorate growth,” said Markit’s chief economist, Chris Williamson.

He added that “The fact that the euro zone Manufacturing PMI came in slightly higher than its flash reading offers little consolation to the fact that the index fell further in April.”

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