Germany's manufacturing PMI slips to 53.8 in September, below forecast of 54.0

• The prior reading was 54.3
• Services PMI came in at 52.9, beating the 50.0 expectation
• The previous services figure was 49.7
• Composite PMI reached 53.8, exceeding the 51.8 consensus
• It stood at 51.8 previously

Commentary:

Phil Smith, Economics Associate Director at S&P Global Market Intelligence stated:

"German businesses reported further signs of resilience in September, with output growth picking up speed, expectations towards the outlook holding steady and employment rising for a second month running, all despite renewed pressure on the inflation front.

"The flash data pointed to the strongest rise in business activity for almost a year, with the service sector finally rejoining manufacturing in growth territory after a quieter period that followed the outbreak of the Middle East war.

"Rising inflows of new work were starting to put pressure on business capacity, however, as underlined by the accumulation of backlogged orders, which in turn helped strengthen labour market conditions. So far, recent job creation has been confined to the service sector, but factory employment continued to show signs of stabilising as goods producers reported rising levels of work-in-hand and greater optimism towards future output."

It is unexpected to see PMI growth accelerating amid surging energy costs and ECB rate hikes. Overall, the data has little impact on the ECB, as the central bank continues to prioritise inflation. This explains the muted market reaction, with the euro merely extending its consolidation against the US dollar.