Germany PMI Manufacturing rose from 57.4 to 57.9 in December, above expectation of 57.0. PMI Services dropped sharply from 52.7 to 48.4, below expectation of 51.0, back in contraction, and a 10-month low. PMI Composite dropped from 52.2 to 50.0, an 18-month low.
Phil Smith, Economics Associate Director, at IHS Markit said:
“The German economic recovery was stopped in its tracks in December by the resurgence of the pandemic, as renewed restrictions and increased uncertainty dampened activity across the country’s service sector.
“However, despite the somewhat gloomy headline number, there were a number of more positive takeaways from December’s flash survey, including an uptick in manufacturing growth and resilient business confidence. Goods production showed its strongest increase for three months, which coincided with a drop in the number of reports of longer lead times on inputs to the lowest since January. Any disruption to supply chains from the emergence of the Omicron variant seems to have been limited so far, although its impact may not have filtered through yet and the situation has the potential to change quickly if more cases start to appear, particularly in ‘zero-COVID’ policy economies.
“A rise in business expectations indicates that companies are looking past any current disruption to a brighter outlook in 2022, when it is expected that the pandemic will become less of an issue and supply-chain constraints will ease. As such, firms are gearing up for strong growth next year and continuing to add to payroll numbers at a historically strong rate.
“Price pressures continue to run extremely hot, but December’s survey has at least offered the first indication that inflation might have peaked as rates of increase in input costs and output prices eased slightly from November’s multi-year highs.”
