The local economic card kicks off the year with the release of S&P Global Purchasing Manager’s Index (PMI). The PMI is an indicator of domestic economic activity and provides insight into sentiment amongst purchasing managers. The index tracks sentiment from purchasing managers from the firms in the construction, manufacturing and services sectors. The PMI reading has held above the neutral 50-mark for the past four months until the end of November, owing to improved optimism concerning economic conditions post-elections. Moreover, the effects of the SARB’s September interest rate cut have also supported sentiment. For the upcoming reading, November’s interest rate cut likely propped up sentiment concerning as monetary conditions have become more supportive of economic activity, although there is still some ways to go. That said, the PMI reading will remain narrowly above the 50-neutral mark, indicating a weak but positive growth outlook from purchasing managers. It remains that structural headwinds such as red tape and infrastructure deterioration continue to limit the upside potential of economic growth.

Today, the preliminary print of Germany’s consumer inflation data for December is expected to show a rise in price growth. The German CPI data comes ahead of the Eurozone inflation reading and will likely set some expectations for the bloc’s data on Tuesday. According to consensus estimates, the headline inflation figure is expected to print at 2.4% y/y, above 2.0% y/y recorded in November. For most of 2024, German inflation remained near the ECB’s target of 2.0%. However, in recent months, headline CPI has risen and is anticipated to rise through the last month of the year as seasonal spending places demand-pull pressure on prices within the basket. Services inflation remains a concern in Germany as some price pressure continues to linger. Additionally, base effects in fuel prices will add to the December figure’s rise.