German factories post first growth in activity since Dec 2018

German manufacturers saw in July an expansion in activity for the first time since December 2018, a survey showed on Monday, signalling that a recovery in the sector remains on track.

IHS Markit’s Final Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the economy, rose to 51.0 in July, rising above the 50 mark that separates growth from contraction for the first time in 19 months.

The June reading was 45.2.

Phil Smith, economist at IHS Markit, linked the rise to a strong pick up in both output and new orders.

He said, however, that the survey pointed to demand remaining below pre-crisis levels, which was holding up a more pronounced recovery.

He added: “Nevertheless, with new orders up sharply in July the immediate outlook for production looks positive, and the manufacturing sector remains on course to make a strong contribution to an expected technical rebound in the economy in the third quarter.”