Germany: Composite PMI records worst reading in over two years in August
The S&P Global Composite Purchasing Managers’ Index (PMI) dropped to a 26-month low of 47.6 in August, down from July’s 58.1. As a result, the index dropped below the 50.0 no-change threshold, signaling a deterioration in business conditions from the previous month.
The headline deterioration reflected worsening operating conditions in both the services and manufacturing sectors. The services PMI fell to an 18-month low of 48.2 in August from 49.7 in July, while the manufacturing PMI rose to 49.8 in August from 49.3 in July. Germany’s private sector suffered from decreasing new business inflows and weaker export sales. Furthermore, there was a spree of cancellations and postponements of new orders across the manufacturing sector. More positively, the rate of input cost inflation eased for the fourth month running, despite remaining elevated. This was partly driven by easing supply bottlenecks. The rate of output price inflation also slowed, but remained high.
Phil Smith, economics associate director at S&P Global Market Intelligence, commented:
“The PMI data paint a bleak picture of the German economy midway through the third quarter, showing a deepening decline in private sector business activity. […] The slowdown in the economy is increasingly taking a toll on firms’ hiring activity, with employment growth easing to its weakest for almost a year-and-a-half in August. […] With the threat of an energy crisis still looming large, the outlook remains riddled with uncertainty.”