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2025-12-16 16:33:23
[Germany's December Manufacturing PMI Declines Further, Service Sector Expansion Slows] ⑴ Preliminary data shows that Germany's December HCOB Manufacturing PMI was 47.7, lower than the expected 48.5 and the previous reading of 48.2. ⑵ The Services PMI was 52.6, lower than the expected 53.0 and the previous reading of 53.1. ⑶ The Composite PMI was 51.5, lower than the expected 52.4 and the previous reading of 52.4. ⑷ Commentary points out that the Manufacturing PMI fell below 50 for the second consecutive month, marking the first decline in output in ten months. ⑸ The continued decline in new orders suggests a less optimistic outlook for the beginning of next year. ⑹ Nevertheless, more manufacturing companies became more optimistic about the outlook for the coming year in December, which may reflect the government's launch of several transportation projects and plans to expand defense capabilities. ⑺ The expansion momentum in the service sector slowed for the second consecutive month, but business activity remained visibly growing, as evidenced by the accelerating expansion in employment. (8) The service sector has achieved stable growth in new business for three consecutive months, supporting overall economic stability and likely to make a significant positive contribution to GDP in the fourth quarter. (9) While manufacturing confidence has improved significantly, the service sector's assessment of the next 12 months weakened in December. (10) This may stem from the market's perception that economic stimulus packages and increased defense spending will primarily benefit construction companies, mechanical engineering industries, and companies directly or as suppliers in the defense sector, while service providers often find it difficult to directly benefit. (11) However, this may not be the case, as industrial production is often accompanied by activities from service providers such as consulting firms, auditing firms, and software developers. Furthermore, there is a so-called multiplier effect, where employees of companies receiving additional (government) orders are more likely to increase spending on dining or entertainment.
