- Final Services PMI 51.6 vs. 51.4 expected and 50.6 prior.
- Final Composite PMI 48.6 vs. 48.4 expected and 47.5 prior.
Key findings:
- HCOB Germany Services PMI Business Activity Index at 51.6 (Sep: 50.6). 3-month high.
- HCOB Germany Composite PMI Output Index at 48.6 (Sep: 47.5). 3-month high.
- New business falls for second month running, leading to further job losses.
Comment:
Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:
“Germany's service sector remains resilient, undeterred by the sluggishness in manufacturing. Activity in the sector continues to rise steadily, maintaining modest growth and even gaining slight momentum in October. This raises the question of where this momentum originates, given that order volumes have been declining since September, and backlogs are gradually being reduced.
Considering the underlying weakness in demand, firms are showing a tendency to downsize their workforce. Nonetheless, German service providers are optimistic about the future. The recent release of retail sales figures for June, July, and August—delayed due to technical issues at the Federal Statistical Office—paints a positive picture.
The data suggest that households leveraged their real wage gains over the summer to increase consumption, implying that improved purchasing power is starting to have an effect. These encouraging retail sales figures may well be driving more optimistic future output expectations among service providers.
Price dynamics within the sector remain steady. Input price inflation increased slightly in October. Nevertheless, the trend in input price inflation has been moderating in the last few months. This trend aligns with the gradual easing of wage pressures, as seen in the official data. Output prices, meanwhile, are seeing more moderate increases.”
