- Prior 39.1
- Services PMI 49.8 vs 47.2 expected
- Prior 47.3
- Composite PMI 46.2 vs 44.8 expected
- Prior 44.6
The beats here, in particular the services sector, is some relief for the euro. But make no mistake, these are still rather poor readings when you take them at face value and the overall economy is still in contraction territory. Once again, faltering demand conditions are to blame and that isn't likely to improve significantly in Q4. HCOB notes that:
"The German services PMI stopped its slump and nudged up near 50 in September. This is a pleasant surprise, to be sure. However, in terms of growth it means that activity remained broadly flat following the decline recorded in August. Therefore, our nowcast for services, which considers the PMI data, continues to signal a drag in the third quarter.
“It’s no secret that the German manufacturing sector has been going through the wringer lately. The HCOB PMIs, however, indicate that things aren't going downhill as fast as before, with the decline in new orders slowing down. In addition, the reduction in purchasing activity is losing momentum. Still, our nowcast for manufacturing production, which includes the PMI figures, is hinting at a drop of more than 2 percent compared to the second quarter.
“The goods sector is still jamming to that deflation tune of recent months, according to PMI numbers. Looking at manufacturing input prices, they keep heading south, just not as quick as before. Most probably this is due to energy prices which have spiked over the last few weeks. Factory output prices, by contrast, have been cut at a marginally faster rate than the month before.
“The HCOB Composite PMI confirms our view that Germany has entered once again into contraction during the current quarter, after the downturn at the tail end of 2022 and early 2023. Our nowcast points to a rather deep GDP slump of 1 percent compared to the quarter before. Having said this, some important sub-indicators like new business and backlogs of work, which appear to be reaching a bottom, offer hope of an end to this slump as we hit the new year."
