Market news

23 November 2020

German PMI drops to five-month low in November - IHS Markit

According to the report from IHS Markit, new lockdown measures to curb the spread of coronavirus disease 2019 (COVID-19) led to an accelerated decline in services activity across Germany in November. However, the country’s manufacturing sector continued to exhibit strong growth, helping to support overall economic activity. Elsewhere, the recent progress in the development of COVID-19 vaccines saw business confidence towards future output perk up to the highest for over two-and-a-half years.

The Germany Composite Output Index fell to its lowest for five months in November. However, at 52.0, from 55.0 in October, it remained comfortably above its level in the second quarter of the year during the initial lockdown phase. Services business activity (index at 46.2) contracted for the second month in a row in November, with the rate of decline accelerating to the quickest seen since May amid closures across the hospitality and leisure industry. The manufacturing output index meanwhile remained elevated at 62.7, albeit down from October’s peak of 65.1 – its first correction for seven months. 

Service providers recorded a marked drop in inflows of new work that was the steepest for six months, which they linked not only to the restrictions on activity, but also hesitancy amongst clients. By contrast, manufacturing order books extended their recent recovery, helped by rising exports sales, albeit with the data highlighting some loss of momentum in the rate of growth. Overall private sector new business rose marginally and at the slowest rate for five months.

Flash data pointed to a broad-based increase in firms’ expectations for output in the year ahead. Buoyed in particular by growing hopes that an effective vaccine would bring about more normal operating conditions over the next 12 months, business confidence rose sharply to its highest since March 2018. Service providers recorded the most notable improvement in sentiment since October, though it was manufacturers who generally remained the most upbeat about the outlook.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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