Recruitment drive in German factories on strong demand

03 May 2021

Job creation within Germany’s manufacturing sector increased last month, according to the results of a survey out on Monday, as optimism was bolstered due to strong demand.

IHS Markit's Final Purchasing Managers' Index (PMI) for manufacturing – which makes up around a fifth of Germany’s economy – hit 66.2, marginally less than a flash reading of 66.4, but close to March’s all-time high of 66.6.

Factories in Germany have reported ongoing activity during national lockdowns which accelerated earlier this year due to robust demand from the U.S. and China, Reuters reports.

“A second consecutive record increase in backlogs of work underlines the strength of demand faced by German manufacturers, but it also highlights the fact that production continues to lag behind new orders," according to Phil Smith, principal economist at IHS Markit.

He went on to say: "The data show that goods producers have redoubled efforts to expand capacity, with April seeing a notable acceleration in the rate of job creation to the fastest in more than two-and-a-half years, but supply issues remain a risk to the sector's growth prospects."

Manufacturers have been challenged with several headwinds such as shortages of components such as chips, as well as raw materials, particularly in the automotive industry.

Smith added: "Despite showing some concerns for the current supply issues, manufacturers generally maintain a strongly positive outlook for the year ahead with expectations at a record high, hinting they believe the bottlenecks to be transitory and that conditions on both the demand and supply side will get better.”