Expensive steel leads to soaring production costs

According to the NTC/BME purchase manager index (edition 5/08), the activity of German industrial enterprises fell significantly in April. This index amounted to 53.6 points which is 1.5 points less than in March. The reason for this is a sharp increase in production costs due to high steel prices and a strong demand for energy and mineral oil. In order to keep their profit margins, companies increased their selling prices. The “selling prices” sub-index reached 56.3 points which is the third highest figure since the index was created in the year 2002.

The strong external value of the Euro curbed economic growth in April: due to a weak foreign demand and economic difficulties on many export markets in particular in the USA German companies registered the second smallest order intake in 36 month. The “occupation” sub-index amounted to 54.2 points which is 2.3 points below the record value reached in March, but still clearly above the long-term mean value (49.7 points).

Companies from all industrial sectors increased their output. The biggest output increase was registered by manufacturers of investment goods.

The NTC/BME purchase manager index is a monthly early indicator in order to forecast the economic development in Germany, calculated under the auspices of the German Association for Material Management, Purchases and Logistics. It is based on the opinions of 500 purchase managers and managing directors from the German processing industry. GERMAN