Services business activity in Germany growth eases to slowest since September 2016
Staff Writer |
Business activity in Germany’s service sector grew at the slowest rate for 19 months in April, the pace of expansion pulling back further from a near seven-year high at the beginning of the year.
Article continues below
>
Service sector new orders showed the weakest rise since July last year, which contributed to a softening of firms’ optimism towards the outlook.
There was better news on the employment front however, with the pace of job creation ticking up to a three-month high.
The seasonally adjusted final IHS Markit Germany Services PMI Business Activity Index registered 53.0 in April, down from 53.9 in March (and a preliminary ‘flash’ estimate of 54.1) and its lowest since September 2016.
The index has been above the 50.0 level that separates expansion from contraction for almost five years, recording an average of 54.3 over this period.
Broken down by category, the data showed slowdowns in activity across Financial Intermediation, Hotels & Restaurants and Other Services (including leisure activities as well as private health care and education).
Post & Telecommunications saw the steepest expansion in output, followed by Renting & Business Activities and Transport & Storage respectively.
The weaker expansion in services business activity in April offset a slight pick-up in the rate of manufacturing output growth, which in March had hit a 15-month low.
The final IHS Markit Germany Composite Output Index came in at a 19-month low of 54.6, down from March’s 55.1 (and below a flash estimate of 55.3).
Order book growth in the service sector slowed for the third time in as many months in April, to show only a modest rise in new business that was one of the weakest seen over the past one-and-a-half years.
Reports from some panellists pointed to client demand having cooled from recent elevated levels.
The surge in new work around the turn of the year has nevertheless resulted in sustained strong pressure on business capacity, and in April the level of outstanding work rose for the seventh time in the past eight months.
Where backlogs were reported, firms often linked this to staff shortages.
Service providers increased their efforts to boost employment levels in April, with the rate of job creation picking up to its highest since January.
Furthermore, workforce numbers rose on a broadbased basis by sub-sector.
However, April’s survey showed service sector business confidence falling for a second consecutive month, from a seven-year peak in February.
The degree of optimism shown towards the outlook for activity over the next 12 months reached the lowest since last November, although it remained well above the historical series trend level (since mid-1997). ■