German factories had surge in new business in October ahead of restrictions - PMI

BERLIN (Reuters) - German factories saw record growth in new orders in October, a survey showed on Monday, fuelling a recovery which is under threat from new restrictions imposed by Chancellor Angela Merkel to tackle rising coronavirus infections.

IHS Markit's Final Purchasing Managers' Index (PMI) for manufacturing, which accounts for about a fifth of the economy, rose to 58.2 in October, the highest reading since February 2018.

This was higher than a flash reading of 58.0 and surpassed September's 56.4 mark.

Phil Smith, principle economist at IHS Markit, said the recovery was being clouded by rising COVID-19 cases in Europe.

"Less positively and perhaps a sign that growth could be about to slow as more firms get back to pre-COVID levels of output, we saw the first setback to manufacturing expectations for seven months in October," said Smith.

"It comes amid rising numbers of coronavirus cases in Europe, and the increased threat of renewed disruption to supply and demand that comes with it," he added.

Chancellor Angela Merkel last week announced an emergency month-long lockdown that includes the closure of restaurants, gyms and theatres to reverse a spike in coronavirus cases that risks overwhelming hospitals.

The measure went into effect on Monday and include limiting private gatherings to 10 people from a maximum of two households. Restaurants, bars, theatres, cinemas, pools and gyms will be shut and concerts cancelled. Schools and daycare centres remain open as well as shops under strict conditions.

(Reporting by Joseph Nasr)