GERMAN DATA: Demand Weakness Persists, Output Charges Accelerate

Both manufacturing and services components were weaker than expected in the German August flash PMI, both at the lowest levels since March this year. Services was 51.4 (vs 52.3 cons, 52.5 prior) while manufacturing was contractionary for the 26th consecutive month at 42.1 (vs 43.3 cons, 43.2 prior).

Demand weakness was cited in both sectors, though more worryingly the PMI noted an acceleration in output prices, despite a moderation in input cost pressures. 

Key notes from the release:

• “Service sector new business barely rose in August, while goods producers noted the steepest reduction in new orders for nine months, amid reports of customer hesitancy and weakness in the construction sector”
• “Employment decreased at the fastest rate in four years as firms expressed less optimism towards growth prospects in the coming year”
• “On the price front, August’s flash data indicated an acceleration in the rate of output charge inflation to the quickest since February”.
• “Input costs, on the other hand, rose at a weaker rate on average across the private sector in August”.