Germany PMI Manufacturing dropped from 47.3 to 46.5 in February. PMI Services rose from 50.7 to 51.3, an 8-month high. PMI Composite rose from 49.9 to 51.1, also an 8-month high.
Phil Smith, Economics Associate Director at S&P Global Market Intelligence said:
“February’s flash PMI survey showed the German private sector economy return to growth territory for the first time eight months, alongside continued resilience in the labour market and a further slight recovery in business confidence.
“Encouragingly, the increase in business activity was broad-based by sector. However, whereas the upturn in services activity was at least partly demand-related, higher manufacturing output owed almost exclusively to a substantial easing of supply-chain bottlenecks, which merely allowed goods producers to catch up on backlogs of work. With manufacturing new orders still in contraction territory, goods producers remain only cautiously optimistic about the year-ahead outlook, and they will likely need to see demand revive for that to change.
“The cooling of demand in the goods-producing sector and subsequent easing of supply-chain pressures has seen factory input costs start to fall. Still, like their service sector counterparts who once again highlighted particularly strong wage demands, manufacturers continued to raise their output prices at a robust rate during February, signalling that core inflationary pressures remain elevated. However, the rate of increase in average prices charged for goods and services continued to slow, down to its lowest since May 2021.”
Full release here.
FOMC minutes: A few participants favored 50bps hike
Minutes of January 31–February 1 FOMC meeting reveal that “almost all participants agreed that it was appropriate to raise the target range for the federal funds rate 25 basis points at this meeting.”
“Many of these participants observed that a further slowing in the pace of rate increases would better allow them to assess the economy’s progress… as they determine the extent of future policy tightening that will be required.”
Yet, “a few participants stated that they favored raising the target range for the federal funds rate 50 basis points at this meeting or that they could have supported raising the target by that amount.”
Full minutes here.
While there are more speculations regarding a revert to 50bps at March meeting, 25bps is still the majority of bets. For now, fed fund futures are pricing in 76% chance of another 25bps hike in March, and just 24% for 50bps.