Germany January flash manufacturing PMI 47.0 vs 47.9 expected | Forexlive
- Prior 47.1
- Services PMI 50.4 vs 49.6 expected
- Prior 49.2
- Composite PMI 49.7 vs 49.6 expected
- Prior 49.0
Similar to the French report earlier, this is a mixed bag with manufacturing activity still in contraction territory while services activity actually improving to a 7-month high. This at least pushes the composite reading closer to stagnation with just a marginal contraction recorded to start the new year. S&P Global notes that:
“January’s flash PMI, which at 49.7 showed business
activity in Germany on a more stable footing at the start
of the year and was broadly in line with market
consensus, lends support to the notion that a recession in
the eurozone’s largest economy is by no means a
foregone conclusion. There was even a return to growth
in services activity after six straight months of decline,
although the increase was only marginal and achieved on
somewhat shaky foundations as inflows new business
remained in decline.
“Alongside easing supply-chain strains, January’s
preliminary survey also pointed to a continued slowdown
in rates of inflation. However, whilst we’re seeing
underlying cost pressures ease quite rapidly in
manufacturing, it’s a different story in services where
inflation remains far stickier thanks in large part to the
influence of growing wage demands. The rate of increase
in average prices charged for goods and services cooled
only slightly and remained historically elevated in
January, to suggest that core inflation is likely to continue
running hot in the near term at least. Signs of continued
labour market resilience will only serve to reinforce the
stubbornness of inflation .
“Business confidence continues to recover from last
October’s low point, but it nevertheless remains subdued
compared to the situation prior to Russia’s invasion of
Ukraine, particularly in manufacturing where we’re still
seeing notable weakness in new orders and perhaps the
beginning of a period of stock depletion as supply-chain
concerns fade. Optimism has returned amid easing
recession risks, but firms remain cautious about the
outlook.”