Germany December PMI Shows Declines in Manufacturing and Services Eased

German manufacturing and service sectors PMIs in December showed mostly modest improvements but nothing exciting S&P Global flash indices show. We continue to see the downturn in the German economy seen as easing. Recession risks overhang with the energy crisis and aggressive ECB rate hikes 2023 faces further downside across these metrics that still are not reflecting a fraction of the lagging impact of tightened monetary policy.

German PMI December 2022 

  • German S&P Global Manufacturing PMI Dec P: 47.4 (est 46.3; prev 46.1)
  • German S&P Global Composite PMI Dec P: 49.0 (est 46.3; prev 46.2)
  • German S&P Global Services PMI Dec P: 48.9 (est 46.5; prev 46.3)

Firms’ costs notably rose at the slowest rate for over one and-a-half years, reflecting the combination of weakened demand and improved supply, the latter signaled by the first quickening of supplier delivery times since the pandemic began.

However, the overall level of business sentiment remains subdued by historical standards, reflecting the challenging environment caused by the high cost of living, rising interest rates, concerns over energy supply and the Ukraine war. Companies reported only a modest increase in payroll numbers again as a result, underscoring the cautious mood that prevails.

Comments on Germany

Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

The latest flash PMI survey paints a somewhat less gloomy picture of Germany’s economy as we head towards the end of the year. Although still in contraction territory, the headline index pointed to a shallower downturn in overall business activity in December, as the declines in both manufacturing and services eased.

The manufacturing downturn has moderated especially markedly in December, led by Germany and linked to a combination of improving supply conditions and reduced fears of energy constraints. The service sector malaise has also calmed, in part driven by signs of reduced fears over the cost-of-living squeeze and, in the financial service sector, reduced concerns over the tightening of financial conditions.

About the Report

The Global Report on Manufacturing is compiled by IHS Markit based on the results of surveys covering over 13,500 purchasing executives in over 40 countries. Together these countries account for an estimated 98% of global manufacturing output2 . Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease.

Source: IHS Markit

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