Germany’s PMI data for August paints a bleak picture, with both the manufacturing and services sectors underperforming. PMI Manufacturing dropped from 43.2 to 42.1, falling short of the expected 43.5. PMI Services also declined, falling from 52.5 to 51.4, below the expected 52.4. This led to a decrease in PMI Composite, which fell from 49.1 to 48.5.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented on the data, noting that the recession in Germany’s manufacturing sector has intensified, with “no recovery in sight.” He highlighted that new orders have plunged more sharply than in the previous month, driven primarily by a significant drop in foreign demand, which signals further challenges ahead.
The manufacturing sector’s struggles are beginning to “spill over” into the services sector, which had been relatively steady until now. For the third consecutive month, growth in services activity has slowed, reflecting the broader economic difficulties.
De la Rubia also pointed out that the anticipated recovery in the second half of the year is “failing to take shape,” and the likelihood of Germany experiencing a second consecutive quarter of negative growth has increased. This raises the possibility of a renewed recession in Germany.
Full Germany PMI flash release here.
