Expensive crude oil drives purchase prices to record high

All business forecasts indicate that prospects for the economy are currently quite pessimistic. And the NTC/BME purchase manager index is not an exception in this respect. In June it reached 52.6 points. This is the lowest index value since October 2007 and one point less than in May this year. Nevertheless, this value still indicates economic growth. The “purchase prices” sub-index, however, reached 71.4 points which is the highest figure in 21 months.

The worldwide increase in prices for oil derivatives as well as steel, energy and fuels lead to a sharp rise of purchasing prices. In order to keep their profit margins companies from all industrial sectors partially passed these additional costs on to their customers once more raising their sales prices.

The strong Euro and a slack on many export markets brought economic growth to a halt: the “export orders received” subindex was quoted at an average of 50.8 points over the 2nd quarter 2008 which is a five-year record low. In particular the automotive industry was affected by the slack in order intake. Only manufacturers of investment goods received relatively numerous orders for export. Due to the small number of orders received the demand for labour force decreased significantly in the German industry. Less orders for export led once more to a small increase in prefabricated goods on stock.

The NTC/BME purchase manager index is a monthly early indicator in order to predict cyclical economic development in Germany and is calculated on behalf of the German association for materials management, purchasing and logistics. It is based on interviews with 500 purchase managers and managing directors from the German processing industry. GERMAN