DE: PMI Composite

February 3, 2017 02:55 CST

Consensus Actual Previous
Composite - Level 54.7 54.8 55.2
Services - Level 53.2 53.4 54.3

The German private sector economy performed a little better than originally thought at the start of the year. Courtesy of a marginally stronger services sector, the final January composite output index weighed in at 54.8, a 0.1 point increase versus its flash estimate but still 0.4 points short of its final December print.

Growth of new orders remained robust but also slipped to a 4-month low and with employment increasing by the most in three months, proved slow enough to see backlogs decline for the first time since October. Still, service providers remained upbeat regarding the year ahead outlook and business optimism saw its highest level since January 2016.

Inflationary pressures continued to build with input costs climbing at their sharpest rate in nearly five years and selling prices also increasing steeply, albeit at a somewhat slower pace than in December.

Overall, the revised results still point to a good start to 2017 by the German economy. However, the pace of recovery will need to be sustained, if not bettered, in coming quarters if underlying Eurozone inflation is to get close to 2 percent over the foreseeable future.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by Markit.

The Purchasing Managers Index (PMI) survey has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the European Central Bank) use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.