- Prior 57.2
- Manufacturing PMI 41.0 vs 43.5 expected
- Prior 43.2
- Composite PMI 50.8 vs 53.5 expected
- Prior 53.9
I typically report the manufacturing reading as the headline for Germany (since it matters more for the economy) but after the French miss earlier, the services reading is under big scrutiny. And it is also another disappointing reading and just adds to the pressure to the euro and ECB surely.
The manufacturing sector also slumped further, as the German economy just marginally squeezed out a little growth at the end of Q2. However, put together with the French reading and suddenly you start to see recessions fears start to reignite. HCOB notes that:
“In manufacturing, all signs point to a contraction in the second quarter, while a slowdown in growth is evident in the services
sector.
“In the goods-producing sector, the HCOB PMI output index signalled an even sharper decline in June than in May. At the
same time, the index of factory new orders, which was already declining, fell again. According to Destatis, the range of the
order backlog fell from a high level to 7.3 months in April, a trend that is likely to continue. Production is therefore expected
to decline in the coming months, but because of the still robust order backlog, we do not expect an abrupt slump.
“The German economy is supported by the services sector, which according to the HCOB PMI expanded quite strongly
throughout the second quarter, although the pace of growth slowed somewhat in June. Service providers continue to face
relatively strong input prices increases, but they are also able to pass on much of the higher costs to customers, another
sign of their strength.
“The overall good condition of the service sector is also underscored by the fact that companies actually increased their staff
slightly more than in the previous month. It is noticeable, however, that the export business of service providers, which
includes tourism, has weakened, after this area had been assessed quite positively in recent months.”
/EUR