Prior 54.3Services PMI 52.9 vs 50.0 expectedPrior 49.7Composite PMI 53.8 vs 51.8 expectedPrior 51.8
Comment:
Phil Smith, Economics Associate Director at S&P Global Market Intelligence said
“German businesses reported further signs of resilience in September, with output growth picking up speed, expectations towards the outlook holding steady and employment rising for a second month running, all despite renewed pressure on the inflation front.
“The flash data pointed to the strongest rise in business activity for almost a year, with the service sector finally rejoining manufacturing in growth territory after a quieter period that followed the outbreak of the Middle East war.
“Rising inflows of new work were starting to put pressure on business capacity, however, as underlined by the accumulation of backlogged orders, which in turn helped strengthen labour market conditions. So far, recent job creation has been confined to the service sector, but factory employment continued to show signs of stabilising as goods producers reported rising levels of work-in-hand and greater optimism towards future output.”
It’s surprising to see PMI growth accelerating in the face of surging energy costs and ECB rate hikes. Overall, the data doesn’t change much for the ECB, as the central bank continues to focus more on inflation. This is why the reaction in the market was muted, with the euro just extending its weakness against the US dollar.
Looking ahead, the market will continue to focus on the Middle East developments as higher energy prices have been the main reason for rate hikes. Therefore, lower energy prices and worse than expected activity data will likely lead to a dovish repricing in the future.
This article was written by Giuseppe Dellamotta at investinglive.com.