DE: PMI Composite

Mon Feb 05 02:55:00 CST 2018

Consensus Actual Previous
Composite - Level 58.8 59.0 58.9
Services - Level 57.0 57.3 55.8

The flash composite output index was revised 0.2 points firmer to 59.0 at the start of the year. This constituted an 81-month high and reinforces the impression of a German economy that is enjoying one its strongest growth phases in recent times.

The upward revision reflected a firmer services sector where the flash PMI was nudged up 3 ticks to 57.3. This was 1.5 points above its final December reading and an 82-month peak.

Growth of new business in services saw its fastest pace in three months, mainly due to the buoyancy of the domestic market, and employment its largest increase in nine. Even so, backlogs accumulated further and for a fifth straight month. Not surprisingly, the sector maintained a strongly positive outlook towards the year ahead with the degree of optimism unchanged from a December level that was amongst the best in more than six years.

Nonetheless, inflationary pressures rose again with rise in input costs reaching its highest mark since April 2011 and well above that seen on average over the survey's twenty-year history. As a result, average prices charged by services firms climbed by the greatest extent in nine-and-a-half years.

The January results are strong across the board and the acceleration in service sector activity particularly marked. Price pressures continue to rise and look likely to be reflected in a faster pace of CPI inflation before very long.

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.