Economic Buzz: German business activity contracts at fastest pace in 18 months in June
The S&P Global Flash Germany Composite PMI Output Index fell to 48.0 in June from 48.8 in May, its lowest reading since December 2024, signalling a moderate decline in overall business activity.
The downturn was driven mainly by the services sector, where activity fell to its weakest level in more than three-and-a-half years, with the services PMI at 46.8. In contrast, manufacturing output continued to grow modestly, with the manufacturing output index rising to 50.8.
New business declined for the fourth consecutive month and at the fastest pace since December 2024. Service sector firms reported the sharpest fall in new orders in almost two-and-a-half years, citing weak economic conditions and market uncertainty. Manufacturing new orders and export orders, however, recorded slight increases.
Weak demand continued to weigh on workloads, leading to another broad-based decline in backlogs and further job losses across the private sector. Employment fell at the same pace as in May, extending the period of workforce reductions that began in mid-2024.
Inflationary pressures eased during June. Input cost inflation slowed from May?s 42-month high to its weakest level in four months, while output price inflation eased to a three-month low. Despite the moderation, both measures remained above historical averages.
Business confidence for the next 12 months weakened slightly and remained below its long-term trend. Confidence improved marginally among manufacturers for a second straight month but stayed subdued, while optimism in the services sector softened after a brief recovery in May.
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