DAX: Tension in the PMI data: what will the figures for September show?

Germany’s HCOB Composite, Manufacturing, and Services PMI for September 2024: A Closer Look

On September 23, 2024, the highly anticipated HCOB (Hamburg Commercial Bank) PMI data for Germany will be released, which could provide insights into the country's economic activity after the ECBs decision to cut interest rates again, just 2 weeks ago.

Today’s data included the HCOB Germany Composite PMI, the HCOB Germany Manufacturing PMI, and the HCOB Germany Services PMI for September. These releases could show us potential trends and shifts in the economic landscape at this stage making them rather important.

1. HCOB Germany Composite PMI: September 2024

The Composite PMI is an overall measure of the combined output in Germany’s manufacturing and services sectors. It is a weighted average of the manufacturing and services PMIs, making it a broader indicator of economic activity.

For the last reading in September 2024, the HCOB Germany Composite PMI came in at 48.4, showing a slight decline from August’s reading of 49.1. This marks the fifth consecutive contraction (any reading below 50 signals a decline in economic activity).

Key Observations:

• The decline in the Composite PMI indicates that Germany’s economy is still under pressure, and the downturn is not sector-specific but rather spread across both manufacturing and services.
• The downward trend signals weaker domestic demand and external pressures, especially in light of a sluggish global economy.
• The last 3 sub-50 readings suggest that Germany might not yet be out of deep waters and a prolonged stagnation like environment might persist.

2. HCOB Germany Manufacturing PMI: September 2024

The previous HCOB Germany Manufacturing PMI came in at 42.4, up slightly from August’s reading of 42.1. This marks a second increase and could indicate a strengthening industrial sector in Germany. However, the numbers are still below 50 which shows that the German economy, has continually been under stress since 2022. This is mainly attributed due to declining global demand especially from China and the USA, energy price volatility, and supply chain disruptions which include price fluctuation of raw materials.

3. HCOB Germany Services PMI: September 2024

The HCOB Germany Services PMI for its latest September reading was 51.2, down from 52.5 in August. Although still in contraction territory, the decline in the services sector has been less severe than in manufacturing. However, the havering of just over 50 indicates that the services sector is close to feeling the impact of economic headwinds. The low reading is mainly associated with increased borrowing cost, lower spending power and low consumer confidence.

The September PMI data shows an economy that is facing multiple challenges.

The September 2024 HCOB Germany Composite, Manufacturing, and Services PMIs highlight the current challenges for the Germany’s economy. Both the manufacturing and services sectors remain in contraction, signalling that the economic recovery has not yet hit us and possible challenges that need to be dealt with.

DAX- Technical analysis

After last weeks increase to new all-time highs last Thursday, the DAX has given back some of the gains and closed the day lower on Thursday. Today the DAX and other European counterparties opened the day with a mild gain. We are a hair below a resistance level at 18,783 and right above the 10 EMA line. The RSI line is moving upwards slightly and is above the center line.

The Stochastic RSI is also trending upwards and is over the center line. A bullish scenario will require us to break through the 18,783-resistance line and a close above that level will add a further bullish dynamic. A breakdown from these levels will require us to break through the 10 EMA and consequently the 20 EMA. With data like the PMIs and other economic figure release this week, we can expect movement in the market according to the data.

Stay tuned for more,

Philip Papageorgiou