(Bloomberg) -- The contraction in Germany‘s private-sector activity worsened in November, dealing another blow to an economy that’s now grappling with a government collapse alongside flat-lining growth.
The composite Purchasing Managers’ Index by S&P Global dipped to a nine-month low of 47.3 from 48.6 in October —holding below the 50 threshold separating expansion from contraction, data Friday showed. Analysts predicted a reading of 48.7.
“These figures are bad news,” Cyrus de la Rubia, an economist at Hamburg Commercial Bank, said in a statement. “. Until recently, the German economy was stabilized somewhat by the service sector, which was making up for the steep decline in manufacturing. Not anymore.”
Europe’s biggest economy has long been suffering amid dwindling foreign demand for industrial goods and cars, as well as the jump in energy prices that followed Russia invasion of Ukraine. Strict borrowing limits, meanwhile, were restraining government spending even before the ruling alliance fell apart.
“The political uncertainty, which has increased since Donald Trump’s election as US president and the announcement of snap elections in Germany on Feb. 23, isn’t helping,” de la Rubia said.
While Germany recently dodged a recession, the Bundesbank said this week that output will probably stagnate this quarter. The country is on track for a second straight full year of contraction.
PMIs are closely watched by markets as they arrive early in the month and are good at revealing trends and turning points in an economy. A measure of breadth of changes in output rather than depth, business surveys can sometimes be difficult to map directly to quarterly GDP.
--With assistance from Mark Evans and Joel Rinneby.
(Adds chart. An earlier version corrected the day of the week)
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