German equities experienced a notable rebound on Thursday, with the blue-chip DAX index rising 0.34% at the closing bell, driven by modest improvements in the private sector of Germany as well as across the broader eurozone. The latest data from the S&P Global compiled HCOB flash PMI survey revealed that the downturn in Germany's private sector has eased to some extent in October.
The HCOB Flash Germany Composite PMI Output Index climbed to a two-month high of 48.4 in October, up from 47.5 in the previous month. Despite the uptick, this figure remains below the pivotal 50.0 threshold, which signifies contraction in economic activity. During this reporting month, the German services sector exhibited a quicker pace of expansion, with the corresponding HCOB flash index surging to a three-month high of 51.4, up from 50.6 in September.
Likewise, the manufacturing sector, a critical component of Europe's largest economy, also demonstrated signs of recovery, with the HCOB Flash Germany Manufacturing PMI reaching a three-month high of 42.6 in October, compared to 40.6 in the prior month. The start of the fourth quarter has proven to be more favorable than anticipated, as highlighted by Hamburg Commercial Bank Chief Economist Cyrus de la Rubia.
"With services growing at a faster pace and the contraction in manufacturing not as steep as observed in the previous month, growth in the fourth quarter is a distinctive possibility," he commented. However, he cautioned that the Gross Domestic Product (GDP) may still remain stagnant for the entire year, as projected by the International Monetary Fund (IMF) following a 0.3% decline in 2023. De la Rubia further noted, "This emphasizes the structural vulnerabilities of the German economy, including elevated energy costs, intensified competition from China, and labor market shortages, all of which are significantly impacting the manufacturing sector." Turning to the broader eurozone, the private sector edged closer to a state of expansion in October, reflected by the HCOB Flash Eurozone Composite PMI Output Index reaching a two-month high of 49.7, marginally up from 49.6 in the previous month.
The services sector within the bloc slipped to an eight-month low of 51.2, while the manufacturing sector made substantial gains, jumping to a five-month high of 45.9. In corporate news, personal care products company Beiersdorf saw a 2.79% increase on Xetra at market close after announcing a 4% nominal rise in its nine-month group sales amid challenging market conditions.
Barclays commented, "Beiersdorf possesses substantial self-help potential to sustain its top-line growth through innovation, appearing less dependent on macroeconomic improvements than some peers. Overall, we believe Beiersdorf can maintain operational momentum and a strong narrative moving forward.".