Germany’s Increased Manufacturing Activity and What It Means

Surge in manufacturing activity to help exports

Germany’s improved price competitiveness and its innovations in the manufacturing sectors positively impacted its exports in 2016. According to the OECD (Organization for Economic Co-operation and Development) data on labor productivity, Germany’s productivity growth was slightly better at 1.4% annually between 2009 and 2012, which was in line with economies like Hungary (1.3%), Austria (1.1%), and the United States (1.3%).

This robust performance of the manufacturing sector has helped Germany achieve a high rate of labor productivity. Now let’s look at the recent numbers in the manufacturing sector.

Germany’s Increased Manufacturing Activity and What It Means

The Markit Germany manufacturing PMI (purchasing managers’ index) stood at 56.8, seasonally adjusted in February 2017, as compared to 56.4 in January, beating the market estimate of 56.0. The manufacturing PMI is released by Markit Economics and provides information on business conditions in the manufacturing sector.

Strong manufacturing PMI reports from Germany and the Eurozone indicate continued expansion in the area. The current level of manufacturing PMI stands at its highest level since January 2011 and has posted continuous improvement in the past 27 months. This increase has stemmed from growth in output, new work, exports, and employment.

Companies and ETFs

German manufacturing exporters continued to gain market shares while expanding into new markets in 2016. Some of the major exporters from Germany include Volkswagen (VOW), Daimler, BMW Group (BMW), Siemens (SIEGY), Adidas (ADDYY), and BASF (BASFY).

Notable ETFs (exchange traded funds) that trade in the US with a focus on Germany include the iShares MSCI Germany (EWG) and the Currency Hedged MSCI Germany (HEWG).