German factories churned out goods at an even faster in November with growth reaching its second-highest in more than two decades, a survey showed on Friday, suggesting that Europe’s biggest economy is shifting into overdrive in the final quarter.
IHS Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the economy, jumped to 62.5 from 60.6 in October.
This was the highest level since February 2011 and the second-best since the survey began in 1996. The final figure, which was in line with a flash reading released last week, was well above the 50 line that separates growth from contraction.
“In over two decades of data collection growth has only ever been better once before, in early-2011 when production levels were still recovering from a financial crisis-induced slump,” IHS Markit economist Phil Smith said.
“New orders, exports and employment all rose at rates close to the fastest ever recorded by the survey, to underline what is an extraordinary spell for goods producers and the labour market alike,” Smith added.
Higher exports and business investments in equipment helped the economy to shift into a higher gear in the third quarter, with gross domestic product (GDP) expanding by 0.8 percent on the quarter after 0.6 percent in the second quarter.
For 2017 as a whole, the Ifo institute expects a growth rate of 2.3 percent which would mean a calendar-adjusted expansion rate of 2.6 percent, the strongest performance in six years.
Ifo’s business climate index showed last week that business morale rose unexpectedly in November to hit an all-time high.
In a sign that the solid upswing is pushing up inflationary pressure due to capacity constraints and record delivery delays, output prices in manufacturing rose the fastest in six-and-half years, the PMI survey showed.
“At these current rates of growth, the sector runs the risk of overheating…,” Smith said.
The Federal Statistics Office will publish industrial orders data for October next week on Dec. 6, followed one day later by industrial output figures for the same month.
Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.
Source: Reuters (Reporting by Michael Nienaber; Editing by Toby Chopra)