German manufacturing growth back at 4-year highs, PMI shows

BERLIN, Aug 3 (Reuters) - Germany's ‌manufacturing sector enjoyed ​a ​strong start to the third quarter as business activity expanded in July at its joint-strongest pace since May 2022, ‌helped by faster output growth and a rebound in export ⁠sales, a survey showed on Monday.

The S&P Global final Purchasing Managers' Index (PMI) for German ‌manufacturing rose to 52.2 in ‌July from 50.3 the month before, in line with a preliminary reading earlier this month and at the same high level as ​recorded in March.

A reading above 50 indicates growth, while below that figure signals contraction.

"Germany's manufacturing sector made an impressive start to the ⁠third quarter, with a notable improvement in export sales helping drive the strongest production growth in ​nearly four-and-a-half years," said Phil Smith, economics associate director at S&P Global Market Intelligence.

Output rose at its fastest rate ​since February 2022 as firms cited ‌stronger demand, higher capacity utilisation and efforts to clear backlogs. Outstanding business fell for a third straight month, though ⁠the pace of decline eased.

New orders increased for a second consecutive month and at the quickest pace since March, driven by export sales that grew ⁠at the strongest rate since February 2022.

Cost pressures also moderated. Input price inflation slowed ​to its lowest since February, while output charge inflation eased for a third straight month to the weakest since March, although both remained elevated by historical standards.

However, ‌Smith said it was difficult to imagine this performance being sustained without a resolution to the conflict in ‌the Middle East, due to the corresponding volatility in oil prices and ⁠uncertainty.

"Indeed, business expectations remain subdued ‌in the manufacturing sector, ​staying below the level seen prior to the outbreak of the conflict," he said.

(Reporting by Miranda Murray; Editing by ‌Toby Chopra)

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