German Private Sector Downturn Eases In October

(RTTNews) - Germany's private sector downturn slowed marginally in October as output dropped at a slightly slower pace and business expectations picked up, the latest HCOB Purchasing Managers' survey compiled by S&P Global showed Thursday.

The flash composite output index rose to 48.4 in October from September's seven-month low of 47.5. The score was also above forecast of 47.6.

Nevertheless, the reading remained below the 50.0 threshold separating growth from contraction, as has been the case in each month since July.

The services Purchasing Managers' Index hit a three-month high of 51.4, while the score was seen at 50.6, unchanged from September.

The manufacturing PMI climbed to a three-month high of 42.6 from 40.6 in the previous month. Economists had forecast the index to rise marginally to 40.7.

Data again highlighted weakness in underlying demand, with inflows of new business falling steeply and for the fifth straight month in October.

There was further a sharp decrease in outstanding business. As a result, firms reduced staffing. Employment decreased for the fifth consecutive month.

However, firms expecting a rise in activity over the coming year outnumbered those predicting a decline. Still business expectations remained well below the long-run series average.

On the price front, average prices charged were broadly unchanged in October. Meanwhile, average input costs increased at a moderate rate that was little-changed for September's 14-month low.

"GDP may stay flat for the whole year as forecasted by the International Monetary Fund in its latest projection, after a 0.3% decline in 2023," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

"Manufacturing will most probably continue to be in a recession in the fourth quarter, but it may start the next year on a better footing, although this assessment based on a one-month improvement should be taken with caution," de la Rubia added.