Germany’s service sector was able to eke out further modest growth in November, but the survey’s forward-looking indicators gave reason for concern.
Given what we’ve seen in the survey data so far and the potential new risks posed by the Omicron variant, the economy is, at best, set for a notable slowdown in growth in the final quarter.
The survey data showed a further intensification of inflationary pressures in November driven by a surge in energy costs, with service providers joining manufacturers in recording an unprecedented rise in prices. This was despite signs of inflation already easing across consumer-facing sectors.
Another strong round of hiring across the service sector in November maintained the labour market’s solid pace of recovery. However, with recruitment tending to lag movements in activity and underlying demand, we can reasonably expect the pace of job creation to slow in line with weaker economic growth and lower business confidence.