StockMarketWire.com - German firms finished 2017 on a high note by recording the sharpest growth in business activity in more than six-and-a-half years, according to December's flash PMI survey from IHS Markit.

The overall performance in the manufacturing sector was the best seen since survey data were first collected in early-1996.

The IHS Markit Flash Germany Composite Output Index climbed to an 80-month high of 58.7 in December, after registering 57.3 in the penultimate month of the year.

Growth accelerated across both manufacturing and services, with the latter seeing the steepest rise in business activity for two years. It was the goods-producing sector that continued to lead the way, however, recording the strongest expansion in output in almost seven years.

The upturn in factory performance was highlighted by the IHS Markit Flash Germany Manufacturing PMI rising to a survey-record high of 63.3 in December, up from 62.5 in November. Unprecedented supplier delivery delays and a near-record boost in firms' stocks of purchases also played a part in lifting the headline manufacturing PMI into uncharted territory.

The level of new orders received by German businesses showed the greatest rise since April 2011, to underline a further strengthening of demand for goods and services in the eurozone's biggest economy. Notably, the latest increase in manufacturing order books was the second-strongest seen in over two decades of data collection. This was partly thanks to another steep rise in the level of goods export orders, with firms reporting higher intakes from Asia, the US and elsewhere in Europe.

Adding to the positive picture, the rate of job creation across Germany's private sector economy gathered pace for the fourth month running in December, to show a steep rise in employment that was only just shy of March's six-year high.

Growth in workforce numbers continued to be led by manufacturers. The hiring of extra staff reflected attempts by businesses to expand operations and capacity, with latest data showing a further marked (albeit slightly slower) increase in backlogs of work.

Firms' willingness to take on new staff was further enhanced by a rebound in future business expectations, which in November had eased to an 11-month low.

On the inflation front, December's survey signalled another strong rise in average prices charged for goods and services, despite the rate of increase slowing down slightly from November's 79-month high.

Businesses raised selling prices to offset the burden of higher input costs, the rate of inflation of which likewise eased slightly from the previous month's peak but remained among the fastest seen over the past six-and-a-half years.

Manufacturers highlighted raw materials as the main source of higher costs, while their services counterparts commented on salary pressures and rising fuel prices.


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