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- Composite PMI 55.6 vs 56.2 prelim
A slight revision lower but it reaffirms a rebound in economic conditions as business activity rises at its quickest rate in five months. This is largely the fading of the omicron impact with business confidence also showing a marked improvement. That said, inflation pressures remain an issue with cost pressures rising to near-record highs once again. Markit notes that:
“February’s PMI data showed Germany’s service sector recovering further from its slump at the end of last year, aided by an initial lifting of some restrictions and a strengthening of demand as the roadmap for the further easing of containment measures was laid out.
“Another strong round of job creation across the services economy contributed to a further improvement in the overall labour market in February, and was consistent with hopes of a continued pick-up in activity in the months ahead as the pandemic’s influence wanes. However, the survey captured the mood before the escalation of the Ukraine-Russia tensions into a conflict, which brings with it downside risks to the growth outlook.
“Inflationary pressures continue to run uncomfortably high, with the combination of the release of pent-up demand and sharply rising costs leading to a nearrecord increase in prices charged across the service sector in February. Given the recent developments in energy prices and the threat of fresh supply disruptions, inflation looks set to stay higher for longer.”