The final data confirmed another poor month for private sector economic activity. Although the 45.8 flash composite output index was revised up a tick to 45.9 it was still short of September's final 46.4 and far enough below the 50-growth threshold to indicate recession. The minor headline revision was mainly due to services where the 48.0 flash sector PMI was raised to 48.2. However, this too remained below 50 and also well down on September's final 50.3. Within services, new business fell for a fourth consecutive month and by the most since May 2020. Both the domestic and overseas markets contracted. Backlogs similarly declined although the rate of depletion here was the least in four months. However, firms remain reluctant to shed staff and employment fell only fractionally as it did in the previous month. Business expectations were only cautiously optimistic about the year ahead but still edged up to their highest level since June.

Input cost inflation slowed to its weakest pace since April 2021 paving the way for a third successive drop in output price inflation which posted its lowest print since May 2021. That said, both measures remained historically firm.

The final October data point to another contraction in real GDP at the start of the current quarter and leave intact a strong probability that the German economy will be in recession by year-end. Today's report puts the German RPI at minus 18 and the RPI-P at minus 4, both measures now signalling a limited degree of underperformance versus market expectations.

No revisions are expected leaving the key composite output index at 45.8, down from September's final 46.4.

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 S&P Global.

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.