Germany November final services PMI 49.6 vs 48.7 prelim

<ul><li>Prior 48.2</li><li>Composite PMI 47.8 vs 47.1 prelim</li><li>Prior 45.9</li></ul><p>That's a decent revision higher, which shows that the German services sector just marginally contracted last month. This comes as the downturn in new businesses are seen easing. However, wage pressures are accelerating and that is pushing up overall costs. So, that is something to be wary about in the months to come as well. HCOB notes that:</p><p>“These numbers for the German service sector defy the gloom one might have anticipated amid the manufacturing sector
recession. Although service activity saw marginal shrinkage in November, a consistent downward spiral is notably absent.
Instead, most indicators show that the problems of the sector are starting to ease a bit. Nevertheless, our GDP nowcast
model signals negative growth for the fourth quarter. This would mean that Germany is in a recession after having registered
a 0.1% drop in the third quarter.
</p><p>“Employers are still very hesitant when it comes to reducing their staff. Indeed, in November they even started to increase
employment a little bit after two consecutive months of slight trimming. This aligns with the prevailing sentiment that labour
shortages persist as a major challenge, leading firms to prefer keeping their workforces intact. A significant downturn in
employment is anticipated only in the event of a surge in insolvencies, a scenario not currently in sight.
</p><p>“Service providers are still wrestling with a decline in new business, both domestic and international. Yet, the November
survey signals a significant easing of the demand dip. Notably, consumer services stand tall, buoyed by a steady job market.
Companies also noted a slower contraction in outstanding work, hinting at a potential stabilisation. With the seismic
constitutional court decision painting an unclear picture for the 2024 public budget and geopolitical uncertainty, the services
sector braces for only modest growth.
</p><p>“The high-wage agreements of the past months are leaving their traces in the form of higher costs for the generally labour-intensive service sector. Input price inflation significantly increased in November from an already historically high level.
Companies are grappling with the challenge of not being able to fully pass on the hike to customers, resulting in a pinch on
their bottom line. Nevertheless, against the backdrop of a lacklustre economy, they persist in hiking prices at rates that defy
the norm.”</p>

This article was written by Justin Low at www.forexlive.com.