News Release

MARKET SENSITIVE INFORMATION

Embargoed until 0930 CET (0830 UTC) 16 December 2022

S&P Global Flash Germany PMI®

Downturn in German business activity eases in December as price

pressures continue to cool

Key findings: S&P Global Flash Germany PMI Composite Output Index
Flash Germany PMI Composite Output Index(1) at
48.9 (Nov: 46.3). 6-month high.
Flash Germany Services PMI Activity Index(2) at
49.0 (Nov: 46.1). 5-month high.
Flash Germany Manufacturing Output Index(4) at
48.7 (Nov: 46.6). 6-month high.
Flash Germany Manufacturing PMI(3) at 47.4 (Nov:
46.2). 3-month high.
Data were collected 06-14 December

December’s ‘flash’ PMI® data from S&P Global showed a

shallower downturn in business activity across Germany’s
private sector economy, with rates of contraction easing
across both manufacturing and services. Price pressures Easing supply chain bottlenecks in turn contributed to a
meanwhile continued to cool from the record highs seen further reduction in pipeline price pressures at the end of
earlier in the year, although they remained historically the fourth quarter. Input cost inflation fell for the third
elevated. On balance, businesses were still pessimistic month in a row to its lowest since March 2021, led by a
about the year-ahead outlook for activity, but less so than slowdown in manufacturing purchase prices. Overall
in November. operating expenses still rose at a faster rate than the
The headline S&P Global Flash Germany PMI historical series average, however, amid widespread
Composite Output Index registered in sub-50 contraction reports of the pass-through of high energy costs and wage
territory for a sixth straight month in December. However, demands.
at 48.9, up from November’s 46.3, its latest reading was Similarly, average prices charged for goods and
the highest in the aforementioned sequence and indicative services continued to rise rapidly by historical standards,
of only a modest rate of decline in private sector activity. as firms looked to pass on higher costs to customers
Underlying data showed slower decreases in both where possible. That said, with both monitored sectors
manufacturing production and service sector activity in reporting slower increases in output prices, the overall rate
December. The rates of contraction were the weakest for of inflation ticked down for the third month in a row and
six and five months respectively. Where a reduction in was the lowest since August 2021.
output was recorded, firms often linked this to weaker Turning to employment, December’s survey pointed to a
demand, citing the impact of uncertainty among customers continued steady rise in workforce numbers across
and high prices. Germany’s private sector. The pace of job creation was
In line with the trend in output, the decline in overall inflows broadly in line with those recorded in both October and
of new work eased in December, registering the November, but remained much slower than seen on
shallowest decrease for four months. That said, the rate of average over the first half of the year. Firms in both
contraction in new business remained sharp overall and monitored sectors reported taking on staff to fill vacancies.
notably quicker than that for output. Supporting output Accordingly, December saw a further broad-based
levels to some extent was an improvement in material reduction in backlogs of work as pressure on business
availability, anecdotal evidence showed. This was also capacity continued to ease. The rate of depletion was
underscored by a sharp reduction in supplier delivery unchanged from November. This masked contrasting
times faced by manufacturers, which was partly linked to trends at the sector level, as a faster decline in service
falling demand for inputs. sector outstanding business was offset by a slower (though

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News Release

still sharp) fall in manufacturing order backlogs. Commenting on the flash PMI data, Phil Smith,
Economics Associate Director at S&P Global Market
A loss of purchasing power due to high inflation, recession
Intelligence said:
concerns, uncertainty around energy supplies and a
gloomy investment outlook were just some of the factors “The latest flash PMI survey paints a somewhat less
continuing to weigh on business confidence during gloomy picture of Germany’s economy as we head
December. Firms that were pessimistic towards activity towards the end of the year. Although still in contraction
over the coming year continued to outnumber the territory, the headline index pointed to a shallower
optimists, albeit only just, with expectations recovering downturn in overall business activity in December, as the
further from September’s recent low to the highest for four declines in both manufacturing and services eased.
months. Although still generally weak by historical
“Price pressures remain historically elevated, reflecting in
standards, sentiment improved in both monitored sectors,
large part the continued pass-through of high energy
and even turned slightly positive among services firms.
costs, but even here there are some positive signs as
rates of both input cost and output charge inflation fell to
multi-month lows due to weaker demand and easing
supply chain frictions.
S&P Global Flash Germany Manufacturing PMI “Supplier delivery times showed another notable
improvement in December, giving some support to
production levels during the month thanks to better
material availability. However, we continue to see a trend
where new orders are falling much quicker than output,
which, if it continues, bodes ill for future activity as firms
eat up their backlogs of work.
“A backdrop of falling demand, high inflation and
tightening financial conditions explains why businesses,
particularly manufacturers, remain downbeat about the
outlook. That said, nerves have settled somewhat
compared to the situation three months ago, when
concerns about the energy crisis were at their peak, in a
further sign that the expected recession could be
shallower than first feared.”

-Ends-

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News Release

Contact
S&P Global Market Intelligence
Phil Smith Sabrina Mayeen
Economics Associate Director Corporate Communications
Telephone +44-1491-461-009 Telephone +44 (0) 7967 447030
Email: [email protected] Email [email protected]

Note to Editors
Final December data are published on 2 January for manufacturing and 4 January for services and composite indicators.
The Germany PMI (Purchasing Managers' Index) is produced by S&P Global and is based on original survey data collected from a
representative panel of around 800 companies based in the German manufacturing and service sectors. The flash estimate is based on
around 85% of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data.
The average differences between the flash and final PMI index values (final minus flash) since comparisons were first available in January
2006 are as follows (differences in absolute terms provide the better indication of true variation while average differences provide a better
indication of any bias):
Average Average difference
Index difference in absolute terms
Composite Output Index1 0.0 0.4
Manufacturing PMI3 0.0 0.3
Services Business Activity Index2 -0.1 0.6

The Purchasing Managers’ Index® (PMI®) survey methodology has developed an outstanding reputation for providing the most up-to-date
possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories
and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better
understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the
European Central Bank) use the data to help make interest rate decisions. PMI® surveys are the first indicators of economic conditions
published each month and are therefore available well ahead of comparable data produced by government bodies.
S&P Global do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as
appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) numbers, first
published seasonally adjusted series and subsequently revised data are available to subscribers from S&P Global. Please contact
[email protected].
Notes
1. The Composite Output PMI is a weighted average of the Manufacturing Output Index and the Services Business Activity Index.
2. The Services Business Activity Index is the direct equivalent of the Manufacturing Output Index, based on the survey question “Is the level of business activity at your company higher,
the same or lower than one month ago?”
3. The Manufacturing PMI is a composite index based on a weighted combination of the following five survey variables (weights shown in brackets): new orders (0.3); output (0.25);
employment (0.2); suppliers’ delivery times (0.15); stocks of materials purchased (0.1). The delivery times index is inverted.
4. The Manufacturing Output Index is based on the survey question “Is the level of production/output at your company higher, the same or lower than one month ago?”

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