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Germany's partial lockdown slows growth in manufacturing - PMI

·2-min read
FILE PHOTO: Employees of German car manufacturer Porsche work on a Porsche 911 at the Porsche factory in Stuttgart-Zuffenhausen

BERLIN (Reuters) - Germany's partial lockdown to contain a second wave of coronavirus infections slowed growth in the manufacturing sector in November but export-oriented companies remained optimistic thanks to strong demand from abroad, a survey showed on Tuesday.

IHS Markit's final Purchasing Managers' Index (PMI) for manufacturing, which accounts for about a fifth of the German economy, fell to 57.8 in October from the 2-1/2 year high of 58.2 reached in the previous month.

The November reading was slightly below a flash estimate of 57.9.

The survey showed the goods-producing sector was not completely immune to the renewed lockdown measures, as closures in hospitality had a knock-on effect on consumer goods production in particular, IHS Markit economist Phil Smith said.

But rising export sales helped to cushion the impact of weaker domestic demand, he added. Among the surveyed businesses, many pointed to rising new orders from clients across mainland Europe and Asia, particularly China.

Chancellor Angela Merkel and state premiers last week agreed to extend until Dec. 20 a partial lockdown which has forced bars, restaurants, hotels, gyms and entertainment venues to close since Nov. 2.

"The extension of the lockdown poses some downside risk to the sector's immediate outlook, though the survey shows that manufacturers are highly optimistic about their prospects for 2021," Smith said.

The PMI survey chimes with high-frequency data such as Germany's truck toll mileage which has also suggested that the industrial sector is so far relatively unscathed by the second wave of the pandemic.

Economic institutes nevertheless expect Germany's gross domestic product to shrink by up to 1% in the fourth quarter after a stronger-than-expected 8.5% rebound in the third and an unprecedented 9.8% plunge in the second quarter.

(Reporting by Michael Nienaber, Editing by Catherine Evans)