Germany’s private sector activity expanded modestly in August, with manufacturing driving growth while services activity declined for the fifth consecutive month, S&P Global’s flash Purchasing Managers’ Index (PMI) survey showed on Friday.
The flash Germany Composite PMI Output Index fell to 51.0 in August from 51.3 in July, marking a two-month low but still indicating expansion. The Manufacturing PMI rose to 54.1 from 52.2, the highest level in 51 months, while the Services PMI Business Activity Index dropped to 48.5 from 49.8, the lowest reading in three months.
Manufacturing output surged to 56.7 from 54.7, the strongest increase in 55 months. The sector recorded the fastest growth in total new orders and export sales since February 2022, supported by stockbuilding, increased defense spending, and data center construction. Employment levels stabilized after 26 consecutive months of decline, with a modest rise in service sector staffing offsetting slower job cuts in manufacturing.
Business expectations improved, reaching their highest level since before the Middle East conflict in February, slightly above the long-run average. Optimism strengthened notably in manufacturing, while price pressures moderated, with output price inflation dropping to its lowest level since March.
Phil Smith, Economics Associate Director at S&P Global Market Intelligence, noted that the recovery in manufacturing had regained momentum after stalling in the second quarter.
