Germany's private sector experienced continued contraction in December, although the rate of decline moderated slightly due to a minor recovery in the services sector, according to preliminary data from S&P Global released Monday.
The HCOB Composite Output Index rose to 47.8 in December, up from a nine-month low of 47.2 in November. Despite this increase, the index remained below the critical 50.0 mark, which distinguishes between growth and contraction.
While services activity returned to growth by the end of the year, it was insufficient to offset the marked and accelerated downturn in manufacturing output.
The preliminary Services Purchasing Managers' Index (PMI) unexpectedly improved, reaching 51.0 compared to 49.3 the previous month, surpassing the forecasted 49.5.
Conversely, the preliminary Manufacturing PMI fell to 42.5 from 43.0 in November. Analysts had predicted a slight increase to 43.1.
The stabilization in services provides a measure of relief against the more rapid decline in manufacturing, suggesting GDP may have avoided contraction in the final quarter of the year, according to Hamburg Commercial Bank's Chief Economist, Cyrus de la Rubia. New business inflow experienced its steepest decline since September, with both sectors seeing quickened rates of reduction.
The survey indicated a significant decrease in work backlogs, as firms were able to process and fulfill new orders more rapidly than they were received.
In the labor market, factory job losses slowed moderately, while employment in the services sector saw only a minor decrease.
Reports of layoffs and hiring freezes reflected the prevailing uncertainty in the business outlook. While expectations for future output improved since September, they remained below the longer-term average.
Regarding pricing, the survey highlighted an increase in inflationary pressures. Input costs rose at their fastest pace since April, with average prices charged showing the largest climb since February.
The material has been provided by InstaForex Company -
www.instaforex.com
