Germany: Private-sector operating conditions continue to improve in September despite setback in services sector
September 23, 2020
German private-sector operating conditions continued to improve in September, albeit at a softer rate compared to the prior month, with the IHS Markit composite Purchasing Managers’ Index (PMI) coming in at 53.7 in September, down from August’s 54.4. The headline figure remained notably above the neutral 50-threshold that signals an overall increase compared to the prior month.
The downtick came solely on the back of a deterioration in service-sector business conditions on the back of subdued foreign demand service providers noted modest growth in domestic new business. Consequently, outstanding work in the services sector fell. More positively, employment among service providers rose, albeit marginally. On the other hand, operating conditions in the manufacturing sector improved at the strongest pace in over two years. Production was ramped up as demand spiked, helped by strong export demand. As a result, backlogs of work rose markedly in the manufacturing sector; however, jobs continued to be shed.
Phil Smith, associate director at IHS Markit, commented: “With services business activity falling for the first time in three months, the recovery in the tertiary sector has possibly reached a ceiling thanks to ongoing social restrictions and still-high levels of uncertainty in the economy, including around job security.”