FX.co ★ German Private Sector Continues To Shrink

Germany's private sector faced continued contraction in November, as the ongoing weakness in manufacturing was exacerbated by the first decline in services activity in nine months, according to the preliminary Purchasing Managers' survey compiled by S&P Global, released on Friday.

The HCOB composite output index fell to 47.3 in November from 48.6 in October, indicating the fastest rate of decline in activity since February.

In November, services business activity entered contraction for the first time in nine months, with the services PMI dropping to 49.4 from 51.6 in October. The anticipated score had been 51.8.

Concurrently, the manufacturing PMI experienced an increase, reaching a four-month high of 43.2, up from 43.0 in the previous month. This figure slightly exceeded the forecast of 43.1.

"The political uncertainty, which has increased since Donald Trump's election as US president and the announcement of snap elections in Germany on February 23, isn't helping," stated Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.

"Nonetheless, the modest rise in the future output index might indicate some hope that the incoming German administration will successfully revitalize the economy through decisive measures, such as reforming the debt brake," de la Rubia added.

The survey highlighted that weaker demand for goods and services led to further job losses as the year drew to a close. Additionally, input cost and output price inflation rates climbed to a three-month high, signaling stronger price pressures in the service sector.

Meanwhile, business expectations improved from a recent low in September, reaching their highest point in three months, as hopes grew for an economic boost following elections next year.