Services Sector Turnover Turning Lower, Mirroring Weak Survey Data

Turnover in German services sectors (excl. finance and insurance) weakened in November, coming in at -0.2% M/M (vs -0.6% prior) and +1.2% Y/Y.

• Those figures, published on Tuesday, which are reported by Destatis in real (inflation adjusted) and seasonally adjusted terms, represented the third monthly decline in a row. The 3M/3M measure came in at -0.6% (vs -0.2% prior), the second decline after 6 consecutive positive prints.
• The strongest gains on a monthly basis could be seen in information and communication at +1.3% M/M (vs -0.1% prior) and in freelance, scientific and technical services at +0.4% (vs +1.0% prior).
• Declines could be observed in the "other services" sector (i.e. rental of movable property and placement of labour) at -1.3% M/M (vs -2.4% prior), transport at -0.7% M/M (vs -0.5% prior) and real estate services at -0.2% M/M (vs +1.4% prior).
• Services have been relatively resilient compared to the manufacturing sector in Germany, but the weakness which started to emerge at the beginning of autumn last year seems to continue.
• Activity implied by the German Services PMI has remained in contractionary territory since November, coming in at 47.7 in January (49.3 Dec, 48.7 Nov). The latest release noted "an insufficient supply of new business to replace completed projects" and the "rate at which outstanding business fell was [...] the quickest seen for just over three-and-a-half years". The IFO services subindex also is on a declining trend but stayed in expansionary territory for now.
• Further dents in the relatively strong performance of German services might thus be possible going forward.

MNI, Destatis