- Manufacturing PMI 43.2 vs 43.0 expected and 43.0 prior.
- Services PMI 49.4 vs 51.6 expected and 51.6 prior.
- Composite PMI 47.3 vs 48.6 expected and 48.6 prior.
Key findings:
- HCOB Flash Germany Composite PMI Output Index(1) at 47.3 (Oct: 48.6). 9-month low.
- HCOB Flash Germany Services PMI Business Activity Index(2) at 49.4 (Oct: 51.6). 9-month low.
- HCOB Flash Germany Manufacturing PMI Output Index(4) at 43.2 (Oct: 42.8). 5-month high.
- HCOB Flash Germany Manufacturing PMI(3) at 43.2 (Oct: 43.0). 4-month high.
Comment:
Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
"These figures are bad news. Until recently, the German economy was stabilised somewhat by the service sector, which was making up for the steep decline in manufacturing. Not anymore. In November, service providers' activity took a hit for the first time since February. Companies are also dealing with rising costs, especially wages. This was highlighted by the big negotiated pay increase in the third quarter, which was the highest since 1993. While some of these costs were passed on to customers, it looks like the sector is feeling the heat.
The manufacturing slump has eased a bit, but it is still nowhere near growth. Goods producers have been cutting staff at a faster rate, which isn't surprising since a few automotive companies and suppliers recently announced deep cost-cutting measures. Export orders have also dropped again. This might change over the next few months because the threat of higher tariffs for car and machinery exports to the US could push some orders forward to avoid those extra costs.
The inventory cycle for purchases shows no sign of turning around after more than 20 months of destocking. It is similar for finished goods. Given the political uncertainty, we don't expect any big changes in the near future. Overall, business activity in Germany has decreased for the fifth month in a row.
The political uncertainty, which has increased since Donald Trump's election as US president and the announcement of snap elections in Germany on February 23, isn't helping. However, the modest increase in the future output index might reflect some hope that the next German government will manage to turn the economy around with bold measures, for example by reforming the debt break."
