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Germany's Busy Factories Bring Fastest Growth in Six Years

May 23, 2017
The Bundesbank said that it expects the region’s largest economy to continue to grow “strongly” in the next few months.

German manufacturing propelled economic growth to the fastest pace in six years as orders continued to pile up.

A Purchasing Managers’ Index for factories jumped to 59.4 in May from 58.2, according to a preliminary report by IHS Markit on Tuesday. That’s the highest reading since April 2011. A gauge for services slipped to a 3-month low.

The Bundesbank said on Monday that it expects the region’s largest economy to continue to grow “strongly” in the next few months, driven by robust demand both at home and abroad. The momentum will underpin the euro-area recovery as the European Central Bank prepares to debate an exit from extraordinary stimulus.

“Manufacturing continued its impressive performance with output, new orders and backlogs all growing at the sharpest rates in over six years, and export expansion hitting a seven-year record,” said Trevor Balchin, senior economist at IHS Markit. The data suggest “growth in the coming quarters remaining strong at around 0.6 percent on average,” he said.

A composite measure for manufacturing and services rose to 57.3 from 56.7 in April, IHS Markit said. Economic expansion also accelerated in France, the company said earlier on Tuesday. Data due at 10 a.m. Frankfurt time will show activity in the euro area slowed marginally in May, according to a Bloomberg survey of economists.

By Alessandro Speciale

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