Germany: German private sector activity remains mired in contraction in November
The German private sector continued cruising at two speeds in November, as the composite Purchasing Managers’ Index (PMI) which is produced by IHS Markit rose from a revised 48.9 in October (previously reported: 48.6) to 49.2 in November. However, the headline index remained south of the neutral 50-threshold that separates contraction from expansion in the private sector for the third consecutive month and showed diverging, underlying trends.
The manufacturing sector continued to be the main drag on private-sector activity as the data points to an ongoing recession in the goods-producing sector. New orders decreased again, although at the weakest pace in nearly a year, while new exports also fell at a softer rate. On the other hand, service sector activity continued expanding in November, albeit at a more subdued over-three-year low soft pace. This came on the back of weaker inflows of new work. However, as demand dynamics remained weak, backlogs of work fell for the 13th month running. In terms of employment, job creation slowed to an over-three-year low in the services sector; however, this largely offset further redundancies in the manufacturing sector.
Business confidence, meanwhile, improved somewhat in November as firms raised their output expectations amid renewed optimism. Meanwhile, output and input prices among service providers rose whereas both prices fell among goods producers. The former came on the back of wage gains while the latter resulted from cheaper raw materials amid falling demand.