German economy ends year on solid footing as labour market booms

[LONDON] Germany's private sector rounded off its best quarter since 2014, with job creation jumping to a four- year high, Markit Economics said.

A Purchasing Managers' Index for manufacturing and services suggests economic expansion in Germany accelerated in the final months of the year from the 0.3 per cent pace recorded in the July-September period, the London-based company said on Wednesday. A composite gauge for December slipped to 54.9 from 55.2 in November. Economists predicted a reading of 55.

The Bundesbank kept its 2016 growth outlook unchanged at 1.8 per cent after the European Central Bank unveiled a fresh round of stimulus on Dec 3. It argued that Europe's largest economy is benefiting from "lively" domestic spending even as the export-oriented manufacturing sector is suffering from uncertainty in emerging markets such as Brazil and China.

"Germany's private-sector companies ended the fourth quarter on a solid footing, with all key barometers of corporate health showing further improvements," said Oliver Kolodseike, an economist at Markit. "The labor market was a particularly bright spot." Companies raised their staffing levels in December amid strong demand and planned expansions, Markit said. Employment growth was particularly strong in the service sector.

Unemployment fell to 6.3 per cent in November, the lowest since German reunification.

A gauge for German manufacturing activity rose to 53 from 52.9, while a measure for services eased to 55.4 from 55.6, according to Markit's report.

A composite PMI for France fell to 50.3 from 51, the lowest level since August, according to a separate report. An index for the euro area, due at 10 am. Frankfurt time, is forecast to remain unchanged at 54.2.

BLOOMBERG