Purchase manager index gaining momentum

There are more and more positive signs for the German economy: the influential Markit/BME purchase manager index (EMI, edition 6/2009) increased for the fourth time in a row in May from 35.4 to 39.6 points. This was the most significant increase since this index had been first calculated in the year 1996. However, the critical barrier of 50 points, which is considered to be the starting point for sound growth, was once more not reached this time. For the last time industry grew in July 2008 when the EMI reached 50.9. The bottom was reached in January 2009 when the index stood at 32.0. Since then the index has been moving upwards again.

German industrial businesses have recently received orders from Asia, in particular from China. The number of orders from the USA and Western Europe, however, was once more falling. Both global players as well as small and medium-sized entities were reducing their production in May. The reduction in incoming orders, in particular to manufacturers of capital goods and intermediate inputs, was, however, smaller than in previous months.

Purchase prices for raw materials such as steel, aluminium and fuels were once more plummeting. At the same time, industrial businesses lowered their selling prices to record lows due to fierce competition. Many businesses received discounts from their suppliers.

Due to overcapacities of suppliers, average delivery times once more decreased in May. GERMAN