German Private Sector Activity Continues To Shrink
December 16 2024 - 12:02AM
RTTF2
Germany's private sector continued to shrink in December albeit
the pace of contraction softened on a slight rebound in services
activity, flash data from S&P Global showed Monday.
The HCOB composite output index registered 47.8 in December, up
from November's nine-month low of 47.2. However, the reading is
still below the 50.0 threshold that separates growth from
contraction.
The services activity re-entered the expansion zone at the end
of the year but it failed to compensate for a steep and accelerated
decline in manufacturing output.
The flash services Purchasing Managers' Index advanced
more-than-expected to 51.0 from 49.3 a month ago. The expected
score was 49.5.
Meanwhile, the flash manufacturing PMI declined to 42.5 from
43.0 in the previous month. The score was forecast to edge up to
43.1.
The improvement in services is a good counterbalance to the
quicker decline in manufacturing output, giving some hope that GDP
might not have shrunk in the last quarter of the year, Hamburg
Commercial Bank Chief Economist Cyrus de la Rubia said. Inflows of
new business showed the steepest fall since September as rates of
decline quickened in both monitored sectors.
There was another notable decrease in backlogs of work as firms
were able to process and complete new orders far more quickly than
they were being received, the survey showed.
Factory job losses declined at a slightly slower pace, while
services employment dropped only marginally.
Reports of layoffs and hiring freezes tallied with an uncertain
business outlook. Expectations for output in the coming year
improved from September but it remained below the long-run
average.
Turning to prices, the survey showed a further pick-up in
inflationary pressures. Input costs rose at the fastest rate since
April. It was a similar story for average prices charged, which
posted the most marked increase since February.
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