German services growth slows milder than anticipated in November

Germany's services sector performed better than expected in November, data published by S&P Global showed Wednesday.

The Hamburg Commercial Bank Germany services purchasing managers' business activity index fell to 53.1 points in November from 54.6 points in October, albeit beating the flash reading of 52.7.

Falling towards the neutral 50-point mark separating growth from contraction, it indicates the pace of business activity growth in Germany's services sector decelerated in November.

The latest survey results indicate a softening of inflationary pressures across the German services economy, S&P Global said. It noted that there were softer increases in both new business and employment.

It added: "A renewed reduction in backlogs of work was seen alongside a weakening of firms' growth expectations for the coming year, which fell to the lowest since June."

Businesses noted an increase in activity, with many highlighting a stronger customer demand amid a second successive monthly increase in inflows of new business in November.

The composite PMI output index declined to 52.4 points in November from 53.9 points in October, better than the flash reading of 52.1.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "The continued growth in new business suggests that business activity in the service sector will also grow in the last month of the year. For the coming year, the expansionary fiscal policy, which is also likely to be accompanied by higher investment volumes, should have positive spillover effects on the service sector. The very modest growth of this sector this year, estimated at 0.4 percent, based on official figures for the first three quarters of the year, should therefore accelerate significantly to over 1 percent in the coming year.

"On the price front, the good news is that cost inflation among service providers has eased somewhat. However, companies were obviously forced to pass on the lower inflationary pressure to their customers, as sales prices also rose at a slower rate. This shows that companies were unable to increase their profit margins."

Germany's decline in manufacturing activity in November was worse than initially estimated, with manufacturing firms continuing to cut their workforces, numbers on Monday showed.

The German manufacturing PMI fell to a nine-month low of 48.2 points from 49.6 in October, underperforming against the flash reading of 48.4 points.

Notably, new orders fell at their fastest pace for 10 months in November, causing production growth to slow further.

The manufacturing PMI output index declined to a four-month low of 50.9 points in November from 52.4 in October, albeit outperforming the 50.7-point flash reading.

The German services PMI features a panel of 400 service sector firms. Responses were collected between November 12 and 25.