German manufacturing picks up steam despite lockdown disruptions - PMI

FILE PHOTO: An employee works at the A3 and A4 production line of the German car manufacturer Audi, amid the spread of the coronavirus disease (COVID-19) in Ingolstadt, Germany, June 3, 2020. REUTERS/Andreas Gebert

BERLIN (Reuters) - German factories churned out more goods in December despite a stricter lockdown to head off a spike in coronavirus deaths in Europe’s largest economy, a survey showed on Monday.

IHS Markit’s final Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the German economy, rose to 58.3 from 57.8 the previous month.

The December reading was slightly below a flash estimate released last month, but it still marked the highest reading since February 2018.

IHS Markit economist Phil Smith said German manufacturing continued to power on at the end of the year as only producers of consumer goods showed some weakness following fresh lockdowns at home and abroad.

Germany imposed a limited lockdown on Nov. 2 under which restaurants, bars, gyms and entertainment venues were closed while factories and shops remained open.

As those measures failed to bring down infection numbers, authorities put in place stricter curbs from Dec. 16 which have shuttered most stores as well as hair salons and other services.

The survey revealed growing supply chain pressures, with widespread reports of shortages of raw materials and components, bottlenecks in sea freight due to a lack of available containers and other COVID-19-related disruptions.

Those supply problems did not cause major disruptions in production in December, but they may start to bite in the coming months, Smith said.

“Nevertheless, manufacturers mainly see a bright future in 2021. With the rollout of the COVID vaccines, it’s hoped that the pandemic will become less and less of a hindrance to demand and that investment will continue to recover in the year ahead.”

Reporting by Michael Nienaber; Editing by Hugh Lawson