Brandenburg Gate in Berlin, Germany

Germany PMI June 2019

Germany: Composite PMI stable in June thanks to a strong services sector

The IHS Markit composite Purchasing Managers’ Index (PMI) was stable at May’s revised 52.6 in June, marking a four-month high that was achieved mainly owing to a strengthening services sector. The downturn in the manufacturing sector extended into June, although lessened somewhat from the prior month. Subsequently, the headline figure remained above the neutral 50-point mark that separates expansion from contraction in Germany’s private sector, while the average reading in the second quarter picked up from the prior quarter to the highest level since Q3 2018. This suggests that economic activity in the second quarter accelerated somewhat in the quarter.

The services sector, which is mainly focused on the domestic market, continued to perform well as the data showed that operating conditions improved at a quicker pace in June compared to the prior month. On the other hand, the slump in the manufacturing sector continued in June. New business in Germany’s private sector economy returned to growth; however, the pace of expansion remained weak largely due to a marked drop in new orders in the manufacturing sector linked to frail export and automotive demand. Foreign orders placed at manufacturers dropped for the tenth month in a row. This, in turn, led to a noticeable drop in outstanding work among manufacturers while service providers recorded an increase in backlogs of work. The diverging trend between goods producers and service providers was also evident in the labor market: manufacturers cut staff for the fourth month in row, but solid job creation in the services sector kept the overall employment growth above the long-run series average.

Regarding prices, input price inflation eased among firms in both sectors; however, output price inflation increased slightly in the services sectors while it decreased in the manufacturing sector. Looking forward, sentiment regarding output growth in the next 12 months decreased to the lowest level since October 2014. Some service sector firms expect a wider economic moderation.

Commenting on the data, Trevor Balchin, Economics Director at IHS Markit, noted that “the June PMI confirms that German growth has stabilized at a moderate pace in the second quarter.” Balchin also stated that the downturn in the manufacturing sector is likely passed its peak but that “the longer-term outlook for the German private sector remains weak”.

Germany Fixed Investment Forecast

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest