Purchase manager index hit record low

The Markit/BME purchase manager index (EMI) is an early indicator in order to predict the development of the German economy. This index has been compiled each month since 1996 in the course of surveys. In December 2008 this index was at its lowest point in its entire history. It fell by 3.0 points to 32.7 (EMI, January 2009 edition). One important reference index value is 50 points: only values above this barrier stand for economic growth. The last such value was registered in July last year (50.9). Since then low values have been signalling increasing economic problems.

Businesses of any size and activity reduced their output in December 2008 (sub-index of 29.6). Industrial companies, in particular producers of intermediate inputs and investment goods suffered from a drop in the number of orders from abroad. A lack of orders from the automotive industry, from the USA and from important markets in Asia led to liquidity problems.

Prices for basic materials such as steel dropped all around the world. Average purchase prices once more plummeted. The sub-index taking into accounts these developments fell to 30.8 points which is the lowest value in its history. Basic materials the price of which recently fell are metal products, electrical and electronical devices, fuels, energy, chemicals, synthetic materials, rubber, paper, wood and packaging materials. GERMAN

The Markit/BME purchase manager index (EMI) is a monthly early indicator in order to forecast the economic development for Germany. It is calculated on behalf of the German association of material management, procurement and logistics. The index is based on the results of interviews with 500 purchase manages and managing directors from the German processing industry.