Germany's manufacturing sector expanded in March at its fastest pace in seven months, driven by output growth and a record increase in employment, the NTC/BME Purchasing Managers' index showed on Tuesday. The survey also pointed to a rise in orders at manufacturing firms, with demand from abroad proving resilient despite strength in the euro, which makes exporters' goods more expensive outside the single currency zone. The NTC/BME Purchasing Managers' index (PMI), based on a survey of around 400 firms, rose to 55.1 from 54.3 in February -- reaching its highest level since August. A reading above 50 indicates expansion.
The March reading surpassed an NTC/BME "flash estimate" issued on March 20, which saw the index at 54.9.
An index on employment rose to 56.5 from 55.3 in February, hitting its highest level since the survey began in April 1996. German unemployment hit a post-war high above 5 million in March 2005 but has since fallen steadily, helped by solid economic growth and hiring by companies to meet firm demand. Joblessness fell for the 23rd straight month in February.
An NTC index on new orders accelerated to 54.9 from 52.8 in February. Another on output eased to 54.7 from 56.0 but remained well above the 50 threshold between expansion and contraction. The strong PMI reading fits in well with the recent reports from the Ifo and ZEW economic institutes showing German corporate morale rose in March, suggesting the economy is proving resistant in the short term to problems in the United States.
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