German PMI Dips to 6-Month Low in August as Supply Shortages Constrained Production

Sewing machine in Sewing Factory, Chiang Mai, Thailand.

German manufacturers grappled to keep up with demand in August due to constraints posed by supply shortages, with output growth dropping that of new orders at the greatest pace.

Source: IHS Markit

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Goods producers’ optimism about growth prospects in the coming year meanwhile struggled, partially attributable to elevated price pressures.

Ongoing efforts to grow capacity saw factory employment increase for the sixth consecutive month, though the number of firms taking on additional staff eased from July’s record.

The headline IHS Markit manufacturing PMI in Germany signaled a loss of pace in the goods-producing sector in August. At 62.6, down from 65.9 in July, the latest reading was the lowest since February.

The greatest drag on the headline index dropped more than five points to its lowest since August 2020. Evidence revealed that firms’ efforts to increase production in line with demand were hampered by raw material and component shortages.

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