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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.

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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.