BERLIN, April 1 (Reuters) - Germany's manufacturing sector expanded in March at its fastest pace since May 2022 as output and new orders grew despite supply disruptions tied to the Iran war, a survey
German Manufacturing Grows in March Amid Iran War-Related Supply Disruptions
Germany's Manufacturing Sector Shows Resilience Despite Global Tensions
BERLIN, April 1 (Reuters) - Germany's manufacturing sector expanded in March at its fastest pace since May 2022 as output and new orders grew despite supply disruptions tied to the Iran war, a survey showed on Wednesday.
Manufacturing Growth and PMI Data
The S&P Global final Purchasing Managers' Index (PMI) for German manufacturing rose to 52.2 in March from 50.9 in February, coming in slightly above an earlier "flash" reading of 51.7.
A reading above 50 marks growth, below signals contraction.
Supply Chain Stress and Lead Times
Signs of stress are already starting to show across the supply chains, said Phil Smith, economics associate director at S&P Global Market Intelligence, adding that lead times on inputs have lengthened to their greatest extent since mid-2022.
"This has helped boost the headline PMI, due to the assumption that longer delivery times are usually associated with increased demand," he said.
Output, New Orders, and Production Trends
March saw stronger rates of output and new order growth, as surveyed businesses signalled that the boost was tied to demand from customers looking to mitigate disruptions.
Production grew at the steepest pace since February 2022, while new orders increased for a third straight month, at the quickest rate since March 2022.
Impact of the Iran War on Costs and Prices
Smith added that the immediate impact of the war was clear to see.
"Most notably, input cost inflation has spiked higher on the back of the surge in oil and gas prices, registering its largest single-month rise on record," he added.
The input prices index posted a record monthly rise, hitting 70.3 in March from 59.4 the month before, which was also its highest level since October 2022.
Factory gate inflation accelerated to a 37-month high as manufacturers passed on part of the higher burden.
Outlook and Expectations
Manufacturers' output expectations over the next 12 months fell to their lowest since November, with anecdotal evidence pointing to price concerns and uncertainty associated with the war, after expectations had reached a four-year high in February.
(Reporting by Miranda Murray; Editing by Hugh Lawson)
