April 3, 2018 / 7:58 AM / in 7 months

Capacity squeeze, illness weigh on German manufacturing - PMI

BERLIN, (Reuters) - - German manufacturing output expanded at its slowest rate in more than a year in March, as capacity constraints, lengthening supply chains and a spate of illnesses took their toll on the sector, index provider IHS Markit said on Tuesday.

FILE PHOTO: A worker of German steel manufacturer Salzgitter AG stands in front of a furnace at a plant in Salzgitter, Germany, March 1, 2018. REUTERS/Fabian Bimmer/File Photo

The final seasonally-adjusted Purchasing Managers’ Index (PMI) for the German manufacturing sector sank for the third month running, hitting 58.2, its lowest level since July 2017, and coming in below last week’s flash estimate of 58.4.

Purchasing managers polled for the IHS Markit/BME survey reported that growing demand for input materials was increasing the prices of inputs, including of raw materials like steel, and placing suppliers under pressure to keep up.

“In many respects, the problems are the result of their own success,” said Phil Smith, principal economist at IHS Markit. “German industry has been going upwards uninterruptedly for three and a half years ... That has placed suppliers under massive pressure.”

Expansion remains strong, however — the manufacturing PMI has been slipping from the all-time high it hit in December.

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Reporting by Thomas Escritt; Editing by Catherine Evans

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