Economic Buzz: German private sector growth eases to four-month low in December
The loss of momentum largely reflected a slower increase in new business. Employment rose modestly and for the third straight month, but business expectations dropped to their lowest since April last year.
On the price front, December's survey data indicated faster increases in both input costs and output charges, with the former rising at the quickest rate for ten months.
The headline HCOB Germany Services PMI Business Activity Index is based on a single question asking how the level of business activity compares with the situation the month before. A reading above 50.0 signals expansion, and the further above 50.0 the faster the rate of growth signalled.
The index ticked down for the second month running in December, falling from 53.1 in November to a three-month low of 52.7.
Ticking down for the second month running from 52.4 in November to 51.3 in December, the HCOB Germany Composite PMI Output Index pointed to a further loss of growth momentum in the private sector as 2025 ended.
The slowdown reflected a renewed decline in new business, which itself was driven by a solid and accelerated reduction in manufacturing new orders.
Exports sales acted as a drag, having fallen for the fifth month running. There was a further modest drop in employment as job creation in the service sector was offset by staff retrenchment across manufacturing. Backlogs fell modestly in both monitored sectors, pointing to a general lack of pressure on capacity.
Input costs rose at the quickest rate for almost a year, with manufacturers facing a first increase in purchase prices since January 2023 and services cost inflation also picking up.
The rate of increase in average prices charged for goods and services was unchanged from the month before, however. Business expectations slipped to an eight-month low, as a drop in services more than offset an improvement in manufacturing.
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