The consensus widely expected a rebound in German manufacturing PMI. It is still well in contraction territory, but it is back to a 5-month high of 43.8 (versus 42.1 in October). The output index is also showing signs of improvement at 45.2 vs prior at 43.9. The bounce is mostly driven by external demand, especially improved export growth to Turkey and the UK. However, downside risks remain for December/January as export growth to China continues to deteriorate, reaching minus 8.2% YoY in October. On another note, the Services PMI is out weaker to a 38-month low of 51.3. However, the risk of contagion from the manufacturing sector to the services sector is still contained in our view.
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