Germany PMI: Momentum fades as manufacturing slips back, services cool

Germany’s private-sector expansion lost steam in November, with factory output contracting again and services growth easing, flash survey data showed Friday.

• Composite PMI (HCOB/S&P Global): 52.1 vs 53.9 in October — a two-month low, but above the 50 growth threshold for a sixth straight month.
• Manufacturing PMI: 48.4 vs 49.6 prior (consensus 49.8) — deeper in contraction. New export orders posted their sharpest drop since January, driving faster backlog depletion and a modest pickup in job losses.
• Services PMI: 52.7 vs 54.6 prior (consensus 54.0) — growth cooled more than expected.

Officials at the finance ministry said only a “moderate recovery” is likely by year-end. Even so, manufacturers’ future output expectations improved, supported by anticipated demand in defence and civil engineering tied to government investment.

Market take

• EUR rates/ECB: Softer PMIs—especially the negative surprise in manufacturing—tilt risks toward a weaker growth mix and could reinforce expectations that the ECB stays patient, watching disinflation vs. growth softness.
• Bunds: Growth disappointment typically supports duration; curve could bull-flatten on haven bids.
• FX (EUR): Mixed—services still expanding, but the factory undershoot and export drag are EUR-negative at the margin.
• Equities: Domestic cyclicals and export-sensitive names face pressure; defence/infrastructure might find relative support given capex signals.

Bottom line: Germany remains in expansion, but the engine is misfiring on the industrial side, with services no longer offsetting as strongly. Near-term momentum looks fragile until external demand stabilizes.