OPINION
Market Rating Before FOMC MeetingJan 31
German Companies Worried About High Energy Prices
In this period, services PMI was announced at 48.2 points, below the expectations of 49.0 points, while composite PMI decreased to 47.6 points from 48.1 points in the previous month.
The report from Markit Economics’ flash data reveals that over the past two months, the private sector activities in Germany have declined sharply. It was claimed that the weight brought on by a confluence of factors, such as high inflation rates and rising interest rates, is what causes economic uncertainty. However, it was noted that the expectations of the companies recovered slightly from the low level in July due to the slight decrease in the rate of increase in production costs.
On the other hand, the report highlighted that weak export sales once again played a significant role in the decline, even though the composite PMI indicated the fastest decline in business activity since June 2020. It was also emphasized that average prices for goods and services continued to rise sharply about the trend in input prices.
While it was noted that the manufacturing industry's high stock levels in August led to the cancellation or delay of new orders, it was also noted that both pre-production and post-production stocks saw almost unexpected increases.
According to the report, although the companies' expectations for future activities had increased from their lowest point in 26 months, they were still significantly lower than they had been before the Russian invasion of Ukraine. The report emphasized that producers experienced significant cost pressures in August and that businesses are concerned about issues like high inflation and the energy crisis.
