- Prior 39.6
- Services PMI 48.0 vs 50.0 expected
- Prior 50.3
- Composite PMI 45.8 vs 46.7 expected
- Prior 46.4
There might be an improvement in the manufacturing sector although the bar is evidently set quite low for that. But the more pertinent issue here is that the services sector is also flailing now and that's a bigger worrying sign for the backbone of the Eurozone economy. HCOB notes that:
"Germany is kicking off the final quarter on a sour note. The HCOB Composite Flash PMI is still stuck in the red this October and even slipped a notch from last month. Therefore, there is much to suggest that a recession in Germany is well underway. With the HCOB PMI indices baked into our GDP nowcast, we are calculating a -0.4 percent slip in GDP this quarter, after an estimated -0.8 percent slide the quarter before. If these nowcasts hit the mark, this would result in a -0.8 percent overall growth rate for 2023. This would make the German government’s -0.4 percent shrinkage call seem pretty rosy.
“The PMI results show that the downturn is broad based. Manufacturing output continues to fall at a steep rate and activity in the services sector, which grew last month, swung into the red again. The jobs market is mirroring the trend - services employment is in month two of a gentle decline, while manufacturing, already four months into staff cuts, just hit the gas on layoffs. However, the recent composite PMI employment index readings are still outshining those dreary levels of the 2001/2002 and 2008/2009 recessions.
“Input prices in the German services sector are continuing to rise at an unusual high rate. Increased energy prices and high wage pressures are most likely at the core of this development. Firms are still managing to roll some of those inflated costs onto the customer's tab, and October did not see much change in that. Thus, there is no reason to pull the plug on inflation concerns.
“Looking for some glimmers of hope? Well, there are, especially in the manufacturing sector. The index of new orders, though at still low levels, has increased for the second month in a row and the output index has jumped above the 40 mark. Together with the increase in the index of stock of purchases, we take these developments as signs that there is some bottoming out happening in this sector. Manufacturing might return to growth territory in the early part of next year."
