Germany’s private sector activity expanded modestly in August, though at a slower pace than in July, as a rebound in manufacturing offset continued weakness in services.
The S&P Global flash Purchasing Managers’ Index (PMI) for the composite output index fell to 51.0 from 51.3 in July, marking a two-month low while remaining above the 50 threshold that separates expansion from contraction. The manufacturing sector drove the improvement, with the flash manufacturing PMI rising to 54.1 from 52.2, the highest reading in 51 months.
Manufacturing output expanded at the fastest pace since February 2022, supported by stronger new orders and export sales. Stockbuilding, increased defense spending, and data center construction contributed to the uptick, according to S&P Global. The services PMI, however, declined for a fifth consecutive month, slipping to 48.5 from 49.8 in July, the lowest reading in three months.
Employment levels stabilized in August after 26 straight months of decline, as gains in service sector hiring offset slower job reductions in manufacturing. Business optimism improved to its highest level since just before the Middle East conflict began in February, slightly exceeding the long-run average, with manufacturing sentiment leading the rebound.
Price pressures eased marginally, with output price inflation dropping to its lowest level since March. Service providers reported slower increases in charges, while manufacturers maintained moderate pricing momentum.
Phil Smith, Economics Associate Director at S&P Global Market Intelligence, noted that manufacturing’s recovery has regained traction after a sluggish second quarter.
