Germany’s Price Pressures Show Worrisome Trend

Germany’s Price Pressures Show Worrisome Trend

By Laura Cooper, Bloomberg reporter and Markets Live commentator

Signs of an upbeat European services recovery are being captured in those headline May PMI prints. But it’s the German manufacturing report details that warrant caution – growing supply constraints could thwart the growth recovery and spur inflationary pressures.

Both Germany and France punched out higher-than-expected flash services prints, abetted by the gradual lifting of pandemic restrictions.

The 56.6 services figure in France and 52.8 in Germany boosted the composite gauges from last month. But Germany’s manufacturing print eased from April, missing market expectations at 64.0, and largely on account of the severity of supply-chain issues.

According to the release, 79% of goods producers reported delays in the receipt of inputs – a fresh record. Supply shortages drove a “further surge” in manufacturing producer prices, rising at the quickest pace since the survey began in 1996. And inflationary pressures are rapidly spreading to services as well, noted the release. That, in turn, boosted input costs and output prices both to record highs.

How long the supply disruptions last remains the key question. Prolonged constraints risks curbing Europe’s economic recovery – and sapping some of that upbeat optimism priced into the euro.

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And then there was this:

Bundesbank warns German Inflaton Could Temporarily Reach 4% in 2021

Weimar deja vu yet?

Tyler Durden
Fri, 05/21/2021 – 08:25

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