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June Flash PMI Weaker Than Expected; But Services Inflation Stickiness Noted

GERMANY

In a similar fashion to France, the German June flash PMI was weaker than expected on all counts. The services PMI remains in expansionary territory though, at 53.5 (vs 54.4 cons, 54.2 prior). Manufacturing has now been in contractionary territory for 2-years, at 43.4 (vs 46.4 cons, 45.4 prior) in June.


Whereas the French print may have been partially driven by political uncertainty, the same case cannot be made in Germany. Somewhat concerningly, services output charge inflation quickened versus in May despite a moderation in the rate of input cost inflation.


Key notes from the release:

  • “The decline in factory new orders was sharp and such that it offset a modest increase seen in services, thereby leading to a renewed decline in total inflows of new work”.
  • “Stronger demand for services was supported by a second straight monthly rise in new business from abroad in the sector”.
  • “Private sector employment dipped slightly at the end of the second quarter, marking the first decrease in three months”, though “there was another round of job creation within the service sector”.
  • “Services inflation …quickened slightly from the month before. That was despite a further slowdown in the rate of increase in service sector input costs to the lowest since March 2021”.
  • “Weak demand meanwhile resulted in further price cuts across the manufacturing sector during June”.

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