Service providers in Germany report weakest expansion for 15 months
Staff Writer |
August saw output in Germany’s private sector expand further, with the pace of increase broadly in line with the trend observed over the past three years of data collection.
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However, at 54.4, down from 55.3 in July, the Markit Flash Germany Composite Output Index signalled a weaker pace of expansion. The slowdown was largely attributed to the service sector, where activity rose to the smallest degree in 15 months. New orders continued to rise during August.
Anecdotal evidence attributed the increase in new business to stronger demand from both the domestic and foreign markets.
In particular, manufacturers recorded the second-sharpest rise in new export orders for two-and-a-half years. As was the case with output, the pace of expansion in overall new business slowed slightly, however.
With output and new orders rising further, companies were encouraged to raise their workforce numbers again in August. The rate of job creation remained well above its long-run average, but was the weakest for three months.
Latest survey results pointed to ongoing pressure on operating capacity in Germany’s private sector, with backlogs of work rising for the third straight month. Despite picking up slightly since July, the rate of backlog accumulation was only marginal.
Meanwhile, input costs continued to increase in August, thereby extending the current sequence of inflation to four months. The rise in input prices was the second-strongest in just over a year.
A number of manufacturers attributed inflation to higher prices for some raw materials. Output charges also rose further during the month as some firms passed higher input costs on to their clients.
The rate of charge inflation accelerated to a nine-month high, but was mild overall. German manufacturers remained cautious about their stock policies in August, with finished goods inventories falling at the fastest pace since early- 2010 and stocks of purchases also declining.
Moreover, supplier delivery times deteriorated to the greatest degree since last November. Business expectations at German service providers meanwhile fell to the lowest level in almost two years, with some companies commenting on subdued demand and challenging market conditions. ■