Technical Analysis

Germany October flash manufacturing PMI 45.7 vs 47.0 expected

  • Prior 47.8
  • Services PMI 44.9 vs 44.7 expected
  • Prior 45.0
  • Composite PMI 44.1 vs 45.3 expected
  • Prior 45.7

The German economy sinks deeper into contraction territory to start Q4 with both the services and composite readings being at 29-month lows. Meanwhile, the manufacturing reading is a 28-month low with factory output also hitting its lowest levels in 29 months. The report highlights that high energy prices continue to have a significant negative impact on business costs and demand. Business expectations also continue to be hampered strongly by strong inflation pressures. S&P Global notes that:

“The flash PMI data show the downturn in German business activity gathering pace at the start of the fourth quarter, adding to the growing signs of an impending recession in the eurozone’s largest economy.

“We’re seeing weakness across the board in the survey data, with both the manufacturing and service sectors reporting accelerating rates of contraction, led by rapidly declining inflows of new work. Businesses are reporting a growing reluctance amongst clients due to increased strain on budgets and an uncertain economic outlook, with high energy costs compounding the situation by fuelling inflationary pressures and directly impacting factory production in some cases.

“Notwithstanding the downturn in activity and deeply negative business expectations, employment levels are yet to fall, pointing to resilience in the German labour market. Firms are showing a willingness to retain staff, and even continue to fill vacancies in some cases, despite facing sharply rising costs – including wage pressures – and the growing prospect of a recession.”

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