2010.11.2305:00:00UTC+00German Manufacturing Activity Rises More Than Expected

German manufacturing sector expanded more than forecast in November on the back of strong output and new order growth, a flash report from Markit Economics showed Tuesday.

The flash manufacturing purchasing managers' index climbed to a four-month high of 58.9 in November from 56.6 in October.

The score was much higher than the economists' forecast of 56.8. A PMI reading above 50 indicates expansion while one below suggests contraction.

"November's PMI data highlight that the German labor market continues to go from strength to strength," Tim Moore, an economist at Markit said.

"Manufacturing jobs growth was the fastest in almost fifteen years of data collection and services providers' staff hiring was close to the records set in 2006/7," Moore noted.

Sharp rises in new business volumes and stronger output growth provided fresh impetus for job creation in German private sector. Jobs growth in the manufacturing sector was the most pronounced since the survey began in April 1996.

Respondents pointed to resurgent client demand and corresponding efforts to increase operating capacity for a boost in employment levels, the report said.

German private sector growth accelerated in November led by both manufacturing and services sector. The composite output index increased to a four-month high of 58.8 in November from 56 in the previous month.

Services activity climbed to a 39-month high with the corresponding index rising to 58.6 in November from 56 in October. The reading was much higher than the expected score of 55.8. The manufacturing output index rose to 59.1 in November from 55.9 in the previous month. The latest reading was the highest in three months, Markit said.

New work received by German service providers rose the most since April 2008, while manufacturing new order growth was the fastest since July and much stronger than the 14-month low seen in September. New export orders in the manufacturing sector also increased in November.

Input price inflation in the German private sector accelerated sharply during the month. The latest price increase was the fastest since September 2008, the report said. Price growth in manufacturing sector was much steeper than the rise in services.

At the same time, output price increased for a third month in succession, with the rate of inflation being the sharpest since October 2008. Manufacturers continued to signal a stronger rise in charges than service providers, Markit said.

Official figures show that the German economy continued to expand in the third quarter led by strong exports. The seasonally adjusted gross domestic product rose 0.7% sequentially following the 2.3% growth in the second quarter. Annually, the GDP grew 3.9%.

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