Germany: Composite PMI improves in January
The S&P Global Composite Purchasing Managers’ Index (PMI) rose to 49.7 in January from December’s 49.0. January’s result marked the strongest reading since June 2022. Consequently, the index moved closer to the 50.0 no-change threshold, signaling a softer deterioration in private sector operating conditions compared to the previous month.
The Manufacturing PMI came in at 47.0 in January, down from Decembers 47.1. Lastly, the services PMI increased to 50.4 in January (December: 49.2).
The print suggests a less gloomy economic outlook, with manufacturing output falling at the joint-weakest rate in six months and services output in expansionary territory for the first time in seven months. Moreover, although it declined, new business contracted at the slowest rate in seven months. Turning to prices, input inflation slowed to the lowest level since October 2020, while output inflation eased to the lowest level in nearly 18 months, supporting demand. Meanwhile, employment rose at the fastest rate in six months, further bolstering demand. Finally, business sentiment improved, turning optimistic for the first time since August.
The January print is the latest datapoint of many to suggest that Germanys economic downturn this year will be less severe than earlier anticipated. The PMI also improved in November and December, as did business confidence, while consumer confidence improved across November, December and January.