German private-sector activity grew at a slower pace in August as a rebound in manufacturing failed to fully offset a sharper contraction in services, according to preliminary data from S&P Global.
The flash composite Purchasing Managers' Index (PMI) for Germany declined to 51.0 from 51.3 in July, remaining above the 50 mark that separates expansion from contraction. The reading matched the median forecast of economists polled by Reuters, who had expected no change from the prior month.
Manufacturing activity strengthened to 54.1 from 52.2, marking the highest level in 51 months and signaling a recovery after a sluggish second quarter. Phil Smith, economics associate director at S&P Global Market Intelligence, noted that the sector "regained momentum" following signs of stalling earlier in the year.
Services activity, however, continued to weaken, with the PMI dropping to 48.5 from 49.8. The decline represented the fifth consecutive monthly contraction and the fastest pace since May, reaching a three-month low. Despite the downturn, Smith pointed to "a second successive slight uptick in new business and a renewed rise in employment" as early signs of stabilization in the sector.
Overall employment levels stabilized after 26 straight months of decline, supported by a modest increase in services hiring and the slowest rate of factory job cuts in over a year. Business sentiment improved to its highest level since just before the U.S.-Israeli conflict with Iran in February, edging slightly above the long-run average.
The data underscores a mixed economic picture in Europe’s largest economy, where manufacturing resilience contrasts with ongoing weakness in services amid shifting demand dynamics.
