Economic Buzz: German Services Activity Decline In December Amid A Resurgence In The Pandemic

5 Jan 2022 , 03:51 PM

December saw the recovery in the German economy stall. The seasonally adjusted Germany Composite PMI Output Index, which is a weighted average of the Manufacturing Output Index and the Services Business Activity Index, registered 49.9 in December. This was down from 52.2 in November and broadly in line with the 50.0 no-change threshold. A slightly faster rise in manufacturing output during the month was offset by a decline in services activity caused by a resurgence in the pandemic and renewed virus containment measures.

A fourth wave of COVID-19 infections and tighter restrictions led to a reduction in German service sector business activity in December. Demand was hit by the resurgence in the pandemic, with new export business falling particularly steeply. Businesses growth expectations improved, however, reflecting widespread hopes that activity would rebound from the current low ebb over the course of 2022. Price pressures meanwhile remained elevated in December.

Rates of input cost and output price inflation ticked down from Novembers record highs, but were still the second fastest on record. After signalling growth in each of the previous seven months, the headline seasonally adjusted IHS Markit Germany Services PMI Business Activity Index – moved below the 50.0 no-change threshold to 48.7 in December, down from 52.7 in November. The latest reading signalled a more moderate rate of decline that those seen during the first and second waves of the pandemic, however.

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