Improvements in PMIs Signal Shallower Contractions

Germany's December flash PMIs saw both manufacturing and services signal a softer downturn for both sectors. Manufacturing increased 1.2 points to 47.4 and services by 2.9 points to 49.0, above expectations of close to no change.

Highlights from the press release:

• Germany's composite PMI remained contractive for a sixth consecutive month in December, albeit edging closer to breakeven at 48.9.
• Businesses remained pessimistic, however less so than in November. Sentiment in services edged tentatively back into positive territory.
• New orders declined at the slowest pace in 4 months, yet remain subdued as muted demand conditions persist.
• Output contracted by the weakest level in 5/6 months boosted by improvements in supplies and delivery times.
• Employment remained robust, with job creation levels in line with Oct/Nov levels and prices continued to ease.
• Phil Smith, Economics Associate Director at S&P Global: "the headline index pointed to a shallower downturn in overall business activity ... (yet) we continue to see a trend where new orders are falling much quicker than output, which, if it continues, bodes ill for future activity as firms eat up their backlogs of work".