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COVID restrictions freeze German private sector growth in December – PMI

FILE PHOTO: A woman wearing a protective mask crosses the skyline of the financial district during sunset as the spread of coronavirus disease (COVID-19) continues in Frankfurt
FILE PHOTO: A woman wearing a protective mask crosses the skyline of the financial district during sunset as the spread of the coronavirus disease (COVID-19) continues to spread in Frankfurt, Germany, October 26 2020, REUTERS / Kai Pfaffenbach / File Photo

December 16, 2021

BERLIN (Reuters) – Growth in German private-sector activity evaporated in December as restrictions aimed at stemming a fourth wave of coronavirus infections hit the service sector in the largest economy. Europe, a survey showed on Thursday.

The IHS Markit Flash Composite Purchasing Managers’ Index fell to 50.0, an 18-year low, from 52.2 in November. This was weaker than a Reuters poll of analysts, who had predicted a drop to 51.1 in December.

A reading of 50 marks a flat level of activity, with any value above signaling growth and any value below indicating contraction.

“Germany’s economic recovery was stalled in December due to a resurgence of the pandemic, as increased restrictions and increased uncertainty dampened activity,” said Markit economist Phil Smith. service sector in the country,” said Markit economist Phil Smith.

The fast PMI for services activity fell to 48.4, a 10-month low, from 52.7 the previous month, indicating a drop in sales among retailers during the important holiday season. year-end importance.

The industrial sector showed some signs of improvement after supply bottlenecks for microchips and other intermediate goods hit factory output, especially among major carmakers. of Germany.

The PMI for manufacturing jumped to 57.9 from 57.4 in November.

“Any disruption to the supply chain from the emergence of the Omicron variant appears to have been limited so far,” Smith said.

But he warned that Omicron’s impact may not have been filtered through, and that the situation could change rapidly if more infections start to emerge, especially in countries with a “no-COVID” approach. “.

PMI survey data shows inflation rates in input costs and output fees slightly down from multi-year highs seen in November when the EU harmonized consumer price index hit 6% in Virtue.

At the same time, business expectations brightened, boosted by hopes that supply chain issues and pandemic-related restrictions on activity could ease over the next year, Markit said.

The Ifo Economic Institute on Tuesday said it expected the German economy to shrink by 0.5% quarter-on-quarter in the last three months of this year and stagnate in the first three months of next year.

Along with the current general price increase, Germany is currently facing some winter months of “stagflation”, or zero growth combined with unusually high inflation.

(Reporting by Michael Nienaber; Editing by Hugh Lawson)

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Bobby Allyn

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