German manufacturing output rises slightly in March: PMI survey

The improvement in supplier performance was by far the greatest seen in the series history and represented an unwinding of the unprecedented disruption brought about by the pandemic, S&P Global said in a release.

The decline in manufacturing input costs meanwhile gathered pace. Less positively, demand remained under pressure as customers refrained from placing new orders due to low confidence, rising borrowing costs and a desire to run down inventories.

Accordingly, the degree of optimism towards the outlook remained low. The headline seasonally adjusted S&P Global-BME Germany manufacturing PMI registered 44.7 in March—down from 46.3 in February and the lowest reading since May 2020.

New orders, which fell at a sharp and slightly accelerated rate, also contributed to March's sub-50 PMI reading, the release said.

The rate of contraction in overall new orders remained slower than seen on average over the second half of last year, helped by an easing in the decline in export sales to the weakest for nine months.

Whilst falling demand led a number of businesses (particularly makers of intermediate goods) to scale back production in March, others reported a rise in output during the month linked to better supply of materials and parts, which allowed progress on backlogs of work.

The net result was a slight rise in output, with the rate of growth picking up marginally since February.

Short-notice postponements and cancellations of orders by customers contributed to a rise in stocks of finished goods at German manufacturers in March, the tenth increase in the past 11 months.

By contrast, pre-production inventories were down for a second straight month, falling at a robust pace that was little-changed from that seen in February as firms slashed their purchasing activity.

The easing of supply-demand imbalances was further underscored by a deepening decline in manufacturing input costs, which fell for the second month running and at the quickest pace since May 2020.

The expectations of German manufacturers towards future production, although positive, were subdued by historical standards in March. They even ticked down slightly and for the first time in five months.

There were concerns towards future demand, amid geopolitical uncertainty, high inflation and tightening financial conditions.

Job creation among manufacturers meanwhile slowed, showing the weakest rise in staffing levels in over two years of employment growth.

ALCHEMPro News Desk (DS)