June saw a slight pick-up in the rate of growth of Germany’s private sector economy from a 20-month low in May, driven by a stronger increase in services business activity.
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New order growth and job creation also gathered pace, with the latter signalling the steepest rise in employment for five months.
However, the manufacturing sector continued to lose momentum and recorded its weakest growth performance for one-and-a-half years.
The IHS Markit Flash Germany Composite Output Index rose to 54.2 in June from 53.4 in May, to mark the first uptick in the index since January.
That said, the implied rate of growth was still the second-lowest over the past 21 months.
By sector, services business activity increased at the quickest rate since March, whereas manufacturing output growth slowed for the fifth time in the past six months to the lowest since November 2016.
The IHS Markit Flash Germany Manufacturing PMI slipped to an 18-month low of 55.9 in June from 56.9 in May.
The drop in the index reflected not only weaker output growth but also slower increases in new orders and stocks of purchases, as well as slight reduction in the incidence of supply chain delays.
A faster rise in manufacturing employment was the only positive influencing factor.
Total inflows of new business rose at the fastest rate for three months in June.
Behind this was stronger underlying demand in the service sector, where companies recorded the strongest increase in new work since January.
Manufacturers, on the other, indicated a further cooling of demand, with factory order books rising only modestly and at the slowest pace since March 2016.
In the detail, the survey showed the smallest monthly gain in manufacturing export orders for over two years.
On a more positive note, June’s survey indicated a sustained strong pace of hiring across the private sector.
The rate of job creation picked up from a 17-month low in May to the quickest since January.
Moreover, employment growth accelerated across both manufacturing and services, with the latter recording the steepest rise in workforce numbers since April 2017.
Business confidence towards the year-ahead outlook for activity was also found to have improved slightly in June.
However, the overall degree of optimism remained well below the highs in 2017.
Data showed conflicting trends at the sector level, with improved sentiment among services firms contrasting with a further waning of manufacturers’ confidence to the lowest for over three years.
June’s survey meanwhile showed the continuation of strong cost pressures driving up prices charged for goods and services.
Input costs rose steeply and at one of the quickest rates seen over the past seven years, with anecdotal evidence highlighting upward pressure from staff pay, fuel prices and commodities in general.
Rates of cost inflation picked up across both manufacturing and services.
Average output charges rose at a marked rate that was little-changed from that recorded in the previous month.
Notably, factory gate price inflation eased to a ten-month low, whereas the increase in service sector output charges was the secondquickest seen for almost ten years. ■