- Manufacturing PMI 42.6 vs 40.8 expected and 40.6 prior.
- Services PMI 51.4 vs 50.6 expected and 50.6 prior.
- Composite PMI 48.4 vs 47.6 expected and 47.5 prior.
Key findings:
- HCOB Flash Germany Composite PMI Output Index(1) at 48.4 (Sep: 47.5). 2-month high.
- HCOB Flash Germany Services PMI Business Activity Index(2) at 51.4 (Sep: 50.6). 3-month high.
- HCOB Flash Germany Manufacturing PMI Output Index(4) at 42.4 (Sep: 41.3). 2-month high.
- HCOB Flash Germany Manufacturing PMI(3) at 42.6 (Sep: 40.6). 3-month high.
Comment:
Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
"The start to the fourth quarter is better than expected. With services growing at a faster pace and manufacturing shrinking not as quickly as in the previous month, growth in the fourth quarter is a distinctive possibility. Even so, GDP may stay flat for the whole year as forecasted by the International Monetary Fund in its latest projection, after a 0.3% decline in 2023.
This underscores the structural weaknesses of the German economy, such as high energy costs, the increased competition from China and the labour market shortages which are all hitting the manufacturing sector hard. It’s encouraging that services activity expanded at a faster pace than in September, after growth had slowed down for four months straight. And even though services companies have trimmed employment more than they did in September, business expectations have improved significantly.
This fits in with the perception that German consumers started to spend more during the summer on the back of higher wages and lower inflation, indicated by official retail sales figures. This trend seems to have continued. The services sector has resumed its role of stabilizing the whole economy. The survey figures deliver tentative signs that we may start to see light at the end of the tunnel in manufacturing. To be sure, output is still shrinking quickly and so is employment.
However, the speed of deterioration has slowed down a bit compared to September. Most importantly, new orders, which fell like a stone over the last couple of months, have lost a bit of their downward dynamic. Manufacturing will most probably continue to be in a recession in the fourth quarter, but it may start the next year on a better footing, although this assessment based on a one-month improvement should be taken with caution."
