German economy contracts in Dec – PMI

Germany’s economy contracted again in December, with the HCOB Flash Germany PMI showing a Composite Output Index of 47.8, up slightly from 47.2 in November but still below the 50.0 growth threshold, according to the latest HCOB flash PMI® survey.

While services activity rebounded modestly, manufacturing remained in deep recession with sharp declines in output, new orders, and employment.

Demand continued to weaken, with new business inflows falling at their steepest rate since September. Inflationary pressures intensified, as input and output prices rose at their fastest pace in months, driven by wage increases in the services sector.

Despite a slight uptick in business confidence, firms remained cautious due to political uncertainty, sluggish growth, and challenges in the automotive industry.

Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted that the services sector offers some hope for recovery, buoyed by rising real wages and potential political clarity following February’s elections, but manufacturing remains a significant drag on the economy.

Attribution: HCOB Flash Germany PMI

Subediting: Y.Yasser