DE: PMI Composite

Thu Jan 04 02:55:00 CST 2018

Consensus Actual Previous
Composite - Level 58.7 58.9 57.3
Services - Level 55.8 55.8 54.3

Business activity was very strong at the end of 2017. The final PMI composite output index weighed in at 58.9, up 0.2 points from its flash estimate and a sizeable 1.6 points above its final November outturn. This was the strongest reading in some eighty months.

The flash services PMI was confirmed at 55.8, a 2-year peak and 1.5 points above its final mid-quarter outturn. Solid rises in new business, backlogs and employment saw business confidence in the year ahead climb to one of its highest levels of the last seven years following a surprising 3-month low in November.

Inflation pressures continued to build despite a dip in the rate of growth of output prices for the first time in three months. Selling prices have now risen for thirty-five consecutive months, marking the longest sequence of gains in the survey's 20-year history. Significantly, in part this reflected higher salaries as well as fresh rises in fuel costs.

The final December PMI data suggest that quarterly German economic growth could be as high as 0.9 percent at year-end. Pressures on capacity are clearly building and with the forward-looking indicators pointing to another robust period for business activity at the start of 2018, underlying inflation trends should be picking up soon.

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.