Latest data released by Markit/BME - 16 December 2020
- Prior 57.8
- Services PMI 47.7 vs 44.0 expected
- Prior 46.0
- Composite PMI 52.5 vs 50.5 expected
- Prior 51.7
The resilience in the German economy has been astounding and the market is taking to this report with much optimism as regional equities push ahead with gains and that is pinning the dollar weaker across the board to start the session.
Just be aware that the survey data is from 4-15 December, and the impact of the tougher lockdown restrictions may yet be felt. However, the outlook stays more positive as businesses are rather upbeat on vaccine optimism going into the year-end.
Fresh highs for EUR/USD as it touches its highest level since April 2018 at 1.2188.
Markit notes that:
"December's 'flash' PMI reassuringly showed the German economy still on a relatively stable platform, at least up until the middle of the month (flash data were collected 4-15 December).
"However, the impending harder lockdown threatens to put pay to some of the resilience we've seen so far, with more sectors set to be impacted by the new tougher virus containment measures.
"Another story that's quickly developing is the rapid emergence of inflationary pressures in the manufacturing sector. The global recovery in goods production has resulted in the scarcity of a number of raw materials and led to a sharp squeeze on supply chains, with sea freight capacity one of the areas under growing pressure. The situation in the manufacturing sector, where rapid growth is resulting in supply bottlenecks and strong cost inflationary pressures, is reminiscent of that seen during the rebound from the global financial crisis a decade ago, only this time there's the added disruption from a global pandemic to contend with.
"Nevertheless, German manufacturers and their service sector counterparts are positive about the outlook for 2021, amid the imminent rollout of COVID vaccines."
