Bottlenecks continue to brake German growth, inflation mounts – PMI

BERLIN, Oct 22 (Reuters) – Growth in business activity slowed in Germany in October, a business survey showed on Friday, with inflationary pressures resulting from supply chain bottlenecks at a record high.

IHS Markit’s flash Germany composite purchasing managers’ index slipped to 52.0 in October, an eight-month low, from 55.5 the month before, with factory production volumes being held back by input shortages and a fall in decline from the automotive sector.

The manufacturing output index fell to 51.1, a 16-month low, while the overall manufacturing index edged down to 58.2 from a final 58.4 in September.

The services sector also showed signs of flagging growth, with the services PMI activity index falling to 52.4, a six-month low, from 56.2 in September.

Despite these challenges, the German economy continued to create jobs, with the rate of job creation accelerating slightly compared with September.

“Should the current trend in hiring continue, it may feed through to higher wages as workers’ bargaining power increases,” said IHS Markit’s Phil Smith.

“We saw a divergence in the expectations of service providers from those of manufacturers, with the latter growing increasingly concerned about supply chain issues, which are expected to continue well into 2022,” he added. 

Photo – EPA-EFE/PHILIPP GUELLAND