German factory activity expands steadily in October, PMI shows

BERLIN, Nov 2 (Reuters) - Germany's manufacturing sector expanded solidly in October as rising export sales and government-linked demand supported output and orders, a business survey showed on Monday.

• The Germany Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 54.2 in October from 53.9 in September

• The 50 mark separates growth from contraction

• "The recovery in the German manufacturing sector remained on track in October despite a resurgence in cost pressures, underlining a sense of resilience in the sector," said Phil Smith, Economics Associate Director at S&P Global Market Intelligence

• Output rose for a 10th straight month, though the pace eased to its weakest since July. New order growth also softened to a three-month low, while export sales grew at a solid and slightly faster pace

• Overseas demand was the second-strongest in more than four-and-a-half years, behind only August's recent peak, with firms citing increased sales from Asia, North America and parts of Europe

• Backlogs of work increased for a third consecutive month, with the pace unchanged from September and still the joint-fastest since April 2022. Employment fell only fractionally, marking the smallest decline since August 2023

• Cost pressures intensified as input price inflation climbed to a five-month high and supplier delivery delays worsened to the greatest extent since May. Output price inflation eased to an eight-month low as competitive pressures limited firms' pricing power

• Manufacturers remained optimistic about output over the coming year, but confidence fell to its lowest since July as sharply rising costs weighed on sentiment. Firms also raised stocks of purchases for the first time in almost four years amid longer lead times

(Reporting by Reuters; Editing by Hugh Lawson)