Services business activity growth in Germany slips to three-month low in October
Staff Writer |
Germany’s service sector saw business activity growth ease to a three-month low in October.
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The pace of expansion nevertheless remained robust, and job creation continued to run at one of the quickest rates seen over the past 11 years.
Business confidence, however, was at its lowest in nearly two years, reflecting concerns over signs of a slowdown in economic growth, rising global uncertainties and skill shortages.
Latest data meanwhile showed a sharp and accelerated rise in prices charged by services businesses, with the rate of inflation the secondquickest seen in over 21 years of data collection.
The headline seasonally adjusted final IHS Markit Germany Services PMI Business Activity Index registered 54.7 in October, down from September’s eight-month high of 55.9 and its lowest reading since July (but above the earlier ‘flash’ estimate of 53.6).
The index was above its long-run average and signalled the continuation of a record sequence of growth that began in mid-2013.
The increase in business activity at the start of the fourth quarter was broad-based by sub-sector, with the strongest rates of growth found to be in Financial Intermediation and Renting & Business Activities.
The final IHS Markit Germany Composite Output Index came in at 53.4 in October, down from 55.0 in September but above the preliminary ‘flash’ estimate of 52.7.
The reading was the joint-lowest seen in over two years.
Alongside a slower rise in services business activity, latest data also showed manufacturing output growth easing to the weakest in nearly four years.
October saw a rise in inflows of new business across the German service sector, linked in general to stronger demand in the domestic market.
Though solid by historical standards, the rate of new order growth was notably weaker than in September and the slowest for five months.
Rising workloads continued to encourage service providers to take on additional staff during October.
In many cases, firms reported pressure on capacity, with backlogs of work in the sector rising for the eighth straight month and to the greatest extent since April.
Accordingly, the pace of job creation remained strong and among the quickest recorded over the past 11 years, pulling back only slightly from September’s recent peak.
Less positively, latest data showed that confidence among service providers was at its lowest in nearly two years.
Still, the number of firms expecting activity to rise over the next 12 months remained much greater than those forecasting a decline, with planned investments, entry into new markets and new products all hoped to support growth.
Inflationary pressures in the service sector remained elevated at the start of the fourth quarter.
The increase in prices charged was in fact the second-quickest in the survey history, just behind July’s record.
A number of firms reported passing on higher costs to clients, with input cost inflation staying close to August’s near seven-and-a-half year high.
Fuel and wages remained the main drivers of cost pressures, according to anecdotal evidence. ■