| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 52.5 | 51.5 | ||
| Manufacturing Index | 48.0 | 46.5 to 49.7 | 48.7 | 47.7 |
| Services Index | 52.5 | 52.0 to 53.0 | 53.3 | 52.6 |
Highlights
Business activity across Germany's private sector gained momentum in January, signalling a cautiously improving start to the year. The composite PMI rose to 52.5, a three-month high, supported by stronger demand conditions and renewed growth in new orders. Services remained the main engine of expansion, with activity accelerating to its fastest pace since October, while manufacturing output continued to fall below the 50-point threshold, but moving closer to 50 by 1.7 points compared to December's 47.0 points.
Forward-looking indicators also improved. Business expectations for the next 12 months strengthened notably, reaching their most positive level since early 2022, driven largely by rising confidence within the services sector. External demand pressures eased, as growth in service exports offset a slower decline in manufacturing orders.
However, the recovery remains uneven and fragile. Labour market conditions deteriorated sharply, with employment falling at the fastest pace since the global financial crisis, excluding the pandemic period. Job losses spread beyond manufacturing into services, reflecting spare capacity and falling backlogs of work.
At the same time, cost pressures intensified. Input prices rose at their steepest rate in nearly three years, driven by higher wages, energy and transport costs. This fuelled a renewed acceleration in output price inflation, concentrated almost entirely in services, complicating the inflation outlook despite improving growth signals.
Market Consensus Before Announcement
Not much change expected with manufacturing seen at 48.0 versus 47.0 and services at 52.5 versus 52.7 a month earlier.
Definition
The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around ten days ahead of the final report and are typically based upon around 85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.
Description
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.