BERLIN (Reuters) – Private sector activity in Germany contracted for the fourth consecutive month in October, as difficulties in the manufacturing sector spread to the services sector, according to a survey by S&P Global.
The composite “flash” HCOB PMI, comprising the manufacturing and services sector, fell this month to 45.8 from 46.4 in October and a consensus of 46.7.
The bar of 50 separates growth from contraction in activity.
“Germany is entering the last quarter on a negative note,” said Cyrus de la Rubia, an economist at Hamburg Commercial Bank, adding that with the drop in the composite PMI, “there is a lot of reason to think that “a recession is well underway in Germany”.
The “flash” PMI services index unexpectedly fell back into contraction territory, to 48.0 in October compared to 50.3 in September. The consensus was 50.0.
This decline is explained by a sharp increase in operating expenses, linked to wage demands and inflation, as well as a drop in new business.
For its part, the “flash” manufacturing PMI increased slightly for the fourth consecutive month, going from 39.6 in September to 40.7 this month, against a consensus of 40.0 but still well anchored in contraction territory. .
“We consider these developments as signs that this sector is reaching the trough of the wave. The manufacturing sector could return to growth at the beginning of next year,” said Cyrus de la Rubia.
(Reporting by Miranda Murray, Blandine Hénault for the French version, edited by Kate Entringer)
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