German S&P Global Composite Flash PMI (Jan) 49.7 vs. Exp. 49.6 (Prev. 49.0)

• "... lends support to the notion that a recession in the eurozone’s largest economy is by no means a foregone conclusion. There was even a return to growth in services activity after six straight months of decline, although the increase was only marginal and achieved on somewhat shaky foundations as inflows new business remained in decline"


• "Alongside easing supply-chain strains, January’s preliminary survey also pointed to a continued slowdown in rates of inflation. However, whilst we’re seeing underlying cost pressures ease quite rapidly in manufacturing, it’s a different story in services where inflation remains far stickier thanks in large part to the influence of growing wage demands. The rate of increase in average prices charged for goods and services cooled only slightly and remained historically elevated in January, to suggest that core inflation is likely to continue running hot in the near term at least. Signs of continued labour market resilience will only serve to reinforce the stubbornness of inflation."


• 
  "Business confidence continues to recover from last October’s low point, but it nevertheless remains subdued compared to the situation prior to Russia’s invasion of Ukraine, particularly in manufacturing where we’re still seeing notable weakness in new orders and perhaps the beginning of a period of stock depletion as supply-chain concerns fade. Optimism has returned amid easing recession risks, but firms remain cautious about the outlook."

via S&P Global

Reaction details (08:38)

• In wake of this release, which diverges from the earlier French reading in terms of the fortunes for manufacturing and services and includes downbeat/concerning commentary, particularly on the core inflation front. However, the release does feature more upbeat commentary on the headline rate of inflation and prospects of a recession, as such a slight dovish reaction occurred in EUR-related assets.


• Specifically, EUR/USD fell from around 1.0885 to 1.0870 and the Bund Mar'23 contract jumped to 138.00 from 137.87, before subsequently paring by a handful of ticks.

24 Jan 2023 - 08:30- ForexData- Source: S&P Global