Germany's manufacturing sector grew at its fastest pace in almost 1-1/2 years in January, boosted by a big intake of new orders and a fresh increase in hiring, a RBS/BME survey shows.
The RBS/BME Purchasing Managers Index (PMI) rose to a seasonally-adjusted 55.0 in January from 53.6 in December. It was the highest level since August 2004, according to data today from NTC research, which compiles the survey.
The data augurs well for manufacturing output in Europe's largest economy, which has relied heavily on strong foreign demand to power growth in the absence of demand at home.
NTC chief economist Chris Williamson said that while growth in new export orders was "very strong", having reached its strongest level since June 2000, domestic activity was also firming up, as shown by the creation of new jobs.
The employment component indicated an increase in staff hiring for a fourth month, hitting 51.1, the highest level since May 2001. Lack of job creation has been cited as a key impediment to domestic growth for many years.
"It's only indicating very modest growth (in employment), but for Germany that is quite newsworthy," said Williamson.
"Since the survey began in 1996, we've only seen two periods of any significant (job) growth. One was 1997-1998, the other was 2000. So the current readings are really quite encouraging."
Nevertheless, German seasonally adjusted unemployment rose unexpectedly in January, partly due to cold winter weather, official data showed yesterday. This stirred some unease among economists that the outlook may not be as bright as hoped, particularly as vacancies also fell.