German Private Sector Contraction Deepens

(RTTNews) - Germany's private sector activity shrank further in August as manufacturing output declined sharply and service sector growth softened for the third consecutive month, flash survey results from S&P Global showed on Thursday.

The headline HCOB flash composite output index fell unexpectedly to 48.5 in August from 49.1 in July. The score was seen at 49.2.

At 51.4, the services Purchasing Managers' Index hit the lowest in five months and was down from 52.5 in July. The reading was below forecast of 52.3.

The manufacturing PMI also dropped to a five-month low in July to 42.1 from 43.2 in the prior month. Economists had forecast the index to climb to 43.5.

"These numbers are a real mess," Hamburg Commercial Bank chief economist Cyrus de la Rubia said. "The recession in Germany's manufacturing sector deepened in August, with no recovery in sight," de la Rubia added.

The survey showed that the total inflows of new work decreased for the third straight month and to the greatest extent since February.

The drop in total new work partly reflected weaker demand from abroad, with services firms and manufacturers recording deeper declines in new export business.

Due to the lack of incoming new orders, backlogs of work continued falling across both sectors in August.

Overall workforce numbers decreased for the third consecutive month and at the fastest rate for four years, the survey showed.

Further, businesses were generally less optimistic towards growth prospects in the coming year, reflecting concerns for the economy as well as political and geopolitical uncertainty.

On the price front, the survey showed that the rate of output charge inflation was the fastest since February. On the other hand, input costs gained at a weaker rate on average across the private sector in August.