- Prior 45.0
- Composite PMI 45.1 vs 44.1 prelim
- Prior 45.7
The revision higher sees business activity fall at a slower rate than in September but overall conditions remain rather subdued. This keeps a sustained downturn momentum in the German economy, with a recession all but certain heading into next year. Inflation remains a key problem amid another sharp rise in input costs. S&P Global notes that:
“A contraction of the German economy in the fourth quarter looks inevitable, with October PMI data signalling sustained declines in activity across both the manufacturing and services sectors amid broad-based strain on demand. A toxic mix of high inflation, soaring energy bills, rising interest rates and heightened levels of uncertainty has seen households and businesses rein in their spending.
“On a more positive note, the rate of decline in services activity did at least ease somewhat and firms’ expectations were less pessimistic than in September, following the initial shock of the Nord Stream 1 pipeline closure.
“However, there was no relief for services firms on the cost front, with the rate of input price inflation even accelerating anew amid reports of increased energy bills, growing wage demands and higher financing costs.
“Understandably, given the continued upward pressure on operating expenses and gloomy economic outlook, services firms are showing greater caution when it comes to hiring. Although the survey’s measure of employment hasn’t yet followed business activity and expectations into contraction territory, October’s reading was nevertheless the lowest since September 2020 and showed that fewer and fewer positions are being filled.”