|Manufacturing - Level||52.1||52.6||51.6|
|Services - Level||54.4||55.6||55.2|
|Composite - Level||54.9||54.5|
Hopes for a pick-up in economic growth this quarter were buoyed by November's flash PMI report which showed unexpected strength in both the manufacturing and, in particular, service sectors. Indeed, at a 54.9, up from a final 54.2 in October, the key composite output index hit a 3-month high.
The manufacturing PMI was provisionally put at 52.6, not overly robust but still 0.5 points firmer than its final print last month and also its best performance since August. Its service sector counterpart was a good deal firmer, climbing more than a point to 55.6, its strongest reading in some fourteen months.
New business expanded strongly despite a slight deceleration in manufacturing where output growth was similarly slightly short of October's rate. Additionally, the overall rise here was accompanied by the sharpest increase in aggregate backlogs in more than four years and that despite the largest gain in employment since December 2011. Accordingly, capacity pressures would appear to be an increasing problem for German industry and this was probably a factor in service sector optimism, despite a rise, remaining short of its average level so far in 2015.
Meantime a fractional advance in input costs was mirrored in output prices which were soft enough to see the rate of aggregate charge inflation slip to its weakest mark since July.
Today's data suggest that demand already in the pipeline will underpin the German economic recovery going into 2016. Nonetheless, total output is still struggling to increase momentum significantly and with prices still weak, there is nothing here to dissuade the ECB from further easing next month.
The Germany PMI (Purchasing Managers' Index) is produced by Markit and is based on original survey data collected from a representative panel of 1000 companies based in the German manufacturing and service sectors. The flash estimate is based on around 85 percent of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data.
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.
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