Latest business survey data showed a further slowdown in the rate of growth of Germany’s private sector economy in May.
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Business activity rose at the weakest pace for over one-and-a-half years, with the month also seeing slower increases in both new orders and employment.
Business confidence towards the outlook meanwhile slipped to its lowest since November 2016.
The IHS Markit Flash Germany Composite Output Index fell to a 20-month low of 53.1 in May, from April’s 54.6.
The Index has now decreased in each of the past four months from a near sevenyear high at the start of the year.
The latest slowdown reflected weaker rates of growth in both service sector business activity and manufacturing output, with each rising the least since late-2016.
The IHS Markit Flash Germany Manufacturing PMI registered 56.8 in May, down from 58.1 in April and its lowest reading since February 2017.
As well as a slower rise in production, the drop in the headline manufacturing Index reflected weaker growth in factory new orders and a further easing of supplier delivery delays from recent record levels.
Total new business in Germany’s private sector rose at the slowest rate for almost three years in May.
The service sector saw inflows of new work increase only modestly, with the pace of growth easing for the fourth time in as many months to the weakest since June 2015.
New order growth in the manufacturing sector was solid by comparison, albeit with the rate of increase also easing further from the highs in 2017 as new export sales growth continued to soften.
More positively, May saw a further solid increase in the level of employment across Germany’s private sector.
Although the rate of job creation eased to a 17-month low due to slower hiring among the country’s service providers, it was still robust by the historical standards of the survey.
Businesses that took on additional staff often commented on efforts to expand capacity, with latest data indicating ongoing growth of backlogs of work, particularly across the manufacturing sector.
However, firms’ confidence towards the yearahead outlook for activity was at its lowest for 18 months in May.
Surveyed businesses in general believed output would rise over the next 12 months, but the overall degree of optimism was well below that than seen at the turn of the year amid reports of overheating in the economy and growing global political uncertainty.
Business confidence eased across both the manufacturing and service sectors, with goods producers at their least optimistic since October 2015.
Elsewhere, latest survey data indicated a pick-up in cost pressures facing German businesses.
The rate of input cost inflation was just below January’s recent peak and the second-highest seen for over seven years.
Anecdotal evidence highlighted the impact of rising oil prices.
Businesses passed on part of the burden of higher costs in the form of increased selling prices in May.
However, a slower rate of inflation in factory gate charges – the weakest seen since last October – meant that the overall pace of increase in prices charged for goods and services eased since March.
The latest rise in service sector output charges was meanwhile the steepest since February. ■