German December manufacturing growth fastest since mid-2011: PMI

Workers assemble BMW i3 electric cars at the production line of the BMW factory in Leipzig

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Workers assemble BMW i3 electric cars at the production line of the BMW factory in Leipzig September 18, 2013. REUTERS/Fabrizio Bensch

BERLIN (Reuters) - Rising output and strong growth in new orders helped German manufacturing expand at the fastest rate in 2-1/2 years in December, a survey showed on Thursday, pointing to a solid start to 2014 for Europe's biggest economy.

Markit's Purchasing Managers' Index for the German manufacturing sector, which accounts for about one-fifth of the economy, rose to 54.3 in December from 52.7 in November, its sixth consecutive month of expansion.

The final reading was the highest since June 2011, and was a tick above the preliminary figure of 54.2 and well above the 50 mark that separates growth from contraction, helped also by a boost in employment in the sector.

"The survey suggests the German manufacturing sector has gained momentum through the winter, said Tim Moore, senior economist at Markit.

"Improving global economic conditions have helped to boost new orders and generate renewed job creation across the sector. Manufacturers of investment goods were the main beneficiaries of the brightening export climate at the end of 2013."

The German economy, a bastion of growth in the early years of the euro zone crisis, slowed last year and had a subdued start to 2013. It bounced back in the second quarter and growth was solid although slower in the third. Economists expect a similar performance between October and December.

"There are positive signals in terms of the growth outlook for 2014, as a build-up of unfinished workloads during December and the desire to reverse recent declines in inventories should support output volumes over the months ahead," Moore added.

Recent sentiment surveys have shown business, investor and consumer morale brightening, but backward-looking hard data has generally been more muted, with the latest industrial figures showing orders and output fell in October.

(Reporting by Alexandra Hudson; Editing by Hugh Lawson)

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