- Final Services PMI 51.2 vs. 51.0 expected and 49.3 prior.
- Final Composite PMI 48.0 vs. 47.8 expected and 47.2 prior.
Key findings:
- HCOB Germany Services PMI Business Activity Index at 51.2 (Nov: 49.3). 2-month high.
- HCOB Germany Composite PMI Output Index at 48.0 (Nov: 47.2). 2-month high.
- Rates of input cost and output price inflation accelerate.
Comment:
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“The main takeaway from the December PMI in services is weak growth paired with strong inflation—stagflation at almost its finest. The surge in costs is jaw-dropping, with the PMI input prices index jumping nearly four points, marking the fastest increase since February last year. The primary culprit here is likely wages, which soared nearly 9% in the third quarter compared to the previous year.
High inflation within the services PMI is quite unusual for an economy flirting with recession. Since 2021/2022, we have seen a stark contrast between high inflation levels and slow growth, or even stagnation, in activity. This mismatch started with the economic shocks of the pandemic and then the war in Ukraine but also hints at a structural shift, possibly tied to demographics and ongoing labour market shortages.
The services sector is back in, if only moderate, growth mode after a dip below 50 in November, and the increased optimism among respondents about future business activity is good news. However, the sustained decline in new business and outstanding business dampens the positive activity numbers.
It is pretty remarkable that services activity has remained resilient despite the prolonged manufacturing recession. Historically, services activity has closely mirrored manufacturing output, except for a few instances during the great recession of 2008/2009 and in 2019/2020. This suggests that a growing portion of services is becoming more independent of industrial activity, highlighting the increasing role of services in stabilizing the economy.”
