Recently there have been numerous negative reports about the state of the German economy. Now there is hope.
The German economy slowed down surprisingly sharply in October. The purchasing managers’ index for the private sector (industry and service providers combined) rose by 0.9 to 48.4 points. The financial services provider S&P Global announced this on Thursday in its monthly company survey.
Economists surveyed by the Reuters news agency had expected a mini-increase to 47.6 points. However, the barometer, which is widely followed on the financial markets, remains well below the 50 mark, above which it signals growth.
“The start to the last quarter of the year is better than expected,” commented the chief economist at Hamburg Commercial Bank (HCOB), Cyrus de la Rubia, on the development. “With the services sector growing faster and manufacturing output not contracting as much as the previous month, positive economic growth in the fourth quarter is certainly possible.” The barometer for industry alone rose by 2.0 to 42.6 points, that for service providers rose by 0.8 to 51.4 points.
Despite the slowdown in the downward trend, the situation on the labor market has worsened: the data here signals the largest job cuts in almost four and a half years. The assessment of the business outlook, however, turned positive again after being negative in September for the first time in a year.
The International Monetary Fund (IMF) expects Germany to experience only stagnation this year and growth of 0.8 percent in 2025. The federal government also does not expect an economic recovery until next year – fueled by consumers’ increasing desire to buy as inflation subsides and interest rates continue to fall.
However, according to the Ministry of Economic Affairs, the gross domestic product (GDP) is likely to have shrunk again in the third quarter, threatening Germany with a technical recession. The data from the Federal Statistical Office on October 30th provide certainty: experts surveyed by Reuters expect that GDP fell by 0.1 percent in the summer.