Germany PMI November 2020


Germany: Private-sector operating conditions improve at five-month weak pace in November

November 23, 2020

Operating conditions in Germany’s private sector improved at a softer pace in November, with the IHS Markit composite Purchasing Managers’ Index (PM) easing to a five-month low of 52.0 from 55.0 in October. However, the index remained above the neutral 50-threshold thar separates expansion from contraction in business conditions.

The print was driven by a deterioration in services sector conditions, which contracted at the strongest pace in six months. The services sector has been hit hard by the Covid-19 crisis and the recent surge in new cases has seen the reintroduction of restrictive measures, which weigh particularly on the services-oriented economy. At the same time, clients have become more hesitant to place new orders and this also dragged on the tertiary sector. On the other hand, operating conditions in the manufacturing sector continued to expand at a robust, albeit somewhat softer, pace. New business continued to rise robustly, buoyed by external demand.

Meanwhile, hopes of an effective vaccine lifted sentiment levels to the highest since March 2018. Higher confidence drove increased employment as services providers geared up for an anticipated increase in activity in the coming months; job losses in the manufacturing sector eased as capacity constraints built. Turning to prices, output charges rose for the second month running, particularly driven by stronger input costs among goods producers.

Phil Smith, associate director at IHS Markit, commented:

“The resilience being exhibited by the manufacturing sector, which the survey shows is benefitting for growing sales to Asia in particular, supports our view that any downturn in the final quarter is expected to be far shallower than those seen in the first half of the year,”

FocusEconomics Consensus Forecast panelists expect fixed investment to increase 3.9% in 2021, which is down 0.3 percentage points from last month’s forecast. For 2022, panelists see fixed investment growing 4.0%.

Author:, Economist

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