The latest HCOB ‘flash’ PMI® survey compiled by S&P Global showed that the private sector in Germany remained in a downturn as business activity fell for a seventh straight month in January. The survey also indicated signs of broad-based weakness in demand, with limited spillover to the labor market. However, the mood among businesses towards the year-ahead outlook brightened slightly. Inflationary pressures remained elevated in the service sector due to wage demands, while prices in the manufacturing sector continued to fall.

According to the report, the news of the private sector’s continued contraction in Germany comes as the US output growth reached its fastest pace in seven months at the beginning of 2024, with prices charged rising at the slowest rate. Additionally, the UK saw a recovery in private sector output gaining momentum in January, and the Eurozone experienced a moderation in its downturn at the start of 2024, although price pressures intensified.

Meanwhile, economic activity in France fell at the steepest pace since September, following a marked month-on-month reduction in private sector business activity. In China, the People’s Bank of China (PBoC) Governor announced a reduction in the Required Reserve Ratio (RRR) from February 5, releasing 1 trillion Yuan into the economy.

During a press conference in Beijing, PBoC’s Pan emphasized the commitment to a prudent monetary policy, ensuring a balanced amount of credit and improving credit structure while stepping up support for private firms and small firms. Pan also highlighted the aim to keep the Yuan at a reasonable equilibrium level and make use of existing funds more efficiently, using aggregate and structural tools to manage China’s financial risks.