- Manufacturing PMI 40.3 vs 42.4 expected and 42.4 prior.
- Services PMI 50.6 vs 51.0 expected and 51.2 prior.
- Composite PMI 47.2 vs 48.2 expected and 48.4 prior.
Key findings:
- HCOB Flash Germany Composite PMI Output Index(1) at 47.2 (Aug: 48.4). 7-month low.
- HCOB Flash Germany Services PMI Business Activity Index(2) at 50.6 (Aug: 51.2). 6-month low.
- HCOB Flash Germany Manufacturing PMI Output Index(4) at 40.5 (Aug: 42.8). 12-month low.
- HCOB Flash Germany Manufacturing PMI(3) at 40.3 (Aug: 42.4). 12-month low
Comment:
Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
"The downturn in the manufacturing sector has deepened again, evaporating any hope for an early recovery. Output plunged at the fastest rate in a year, with new orders collapsing. In a sign of resignation, companies have shed staff at a rate not seen since the COVID-19 pandemic in 2020. This comes as several major automotive suppliers have announced significant job reductions. These troubling figures are likely to intensify the ongoing debate in Germany about the risk of deindustrialization and what the government should do about it."
“Optimism is something of the past. Manufacturers are downright depressed about their future activity, with expectations for the coming year plummeting. In a striking shift, moderate optimism in August has quickly turned into the steepest pessimism in a year by September. This rapid downturn in sentiment is most likely linked to the wave of negative headlines surrounding Volkswagen, which has cast a shadow over the broader industry."
“The slump in manufacturing is beginning to spill over into Germany's otherwise resilient services sector. Activity growth among service providers has slowed for four consecutive months, edging closer to stagnation. In response to the weakening demand, companies are continuing to reduce their workforce. The outlook for the services sector does not look pretty. Outstanding orders have contracted at their fastest pace in seven months, while new business has seen a clear decline."
“A technical recession seems to be baked in. Our GDP nowcast for the current quarter, which considers the HCOB PMI among other indicators, now points to a 0.2% decrease compared to the quarter before. In the second quarter GDP already shrank at a rate of 0.1%. There is still some hope that the fourth quarter will be better as higher wages combined with lower inflation should boost not only real income but also consumption, supporting domestic demand."
