sef, CNBC Indonesia
Wednesday, 10/25/2023 09:00 WIB
Photo: German flag (dpa/picture alliance via Getty Images)
Jakarta, CNBC Indonesia – Germany actually experienced economic contraction for four consecutive months. The latest data shows the decline not only occurred in the manufacturing sector but also the services sector, as shown by a preliminary survey on Tuesday.
The HCOB German Flash Composite PMI, compiled by S&P Global, fell to 45.8 in October from 46.4 in September. This was below economists’ forecast of 46.7.
Please note that numbers below 50 indicate business contraction. Meanwhile, numbers above 50 show the opposite.
“Germany started the last quarter in bad condition,” said Hamburg Commercial Bank Chief Economist, Cyrus de la Rubia, quoted by Reuters Wednesday (25/10/2023).
“There are many things that indicate that a recession in Germany is indeed underway,” he added.
Specifically for the services sector, business activity actually experienced slight growth in the previous month. But an unexpected decline occurred.
The latest data shows the sector’s PMI to be 48.0 from 50.3 in September. Analysts polled by Reuters had expected a figure of 50.0.
According to the survey, a sharp increase in operational costs, linked to wage demands and inflation, as well as a decline in the number of new businesses have put service providers below the 50 mark.
The manufacturing PMI increased slightly for the fourth month in a row, to 40.7 from 39.6 in September. This is in line with analyst expectations, although it is still in contraction territory.
“Looking for a glimmer of hope? There is, especially in the manufacturing sector,” said de la Rubia again, pointing to an increase in new orders and output, as well as an increase in stock purchases.
“(However) we consider these developments as signs that the sector is heading for a bottom. Manufacturing may return to growth territory early next year,” he added.
According to data from the German statistical office released on August 25, Germany recorded a growth rate of 0% for the three months to July. This is in line with the first estimates published at the end of July.
In the previous two quarters, the German economy contracted, aka minus 0.4% and 0.1%. Meanwhile, on an annual basis (year-on-year/YoY), the German economy contracted again by 0.2%.
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2023-10-25 02:00:00
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