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German private sector growth at 16 month-low in November: PMI
[BERLIN] Germany's private sector has grown at the slowest rate in 16 months in November as manufacturing stagnates and services lose momentum, a survey showed on Thursday, signalling a weak fourth quarter for Europe's largest economy.
Markit's flash composite Purchasing Managers' Index (PMI), which tracks growth in the manufacturing and services sectors that account for more than two-thirds of the economy, fell to 52.1 in November from 53.9 in October, marking a 16-month low.
The manufacturing index slumped to 50.0, the threshold dividing growth from contraction, from 51.4 in October. The service sector index sank to 52.1 from 54.4 the previous month.
Both were well below the consensus forecasts in a Reuters poll.
Manufacturers reported the steepest drop in new work in nearly two years and attributed this to economic uncertainty and weaker demand from both domestic and foreign markets. "In the past growth in Germany was largely reliant on the services sector with the manufacturing sector cooler. When that happens, usually services follow the goods producing sector on the downwards trend and that is what we are seeing at the moment," said Markit chief economist Chris Williamson. "Encouraging indicators are pretty few and far between. Manufacturing is stagnating, new orders are falling for a third month, and the decline is the worst since the end of 2012." The German economy grew by just 0.1 percent in the third quarter of 2014, narrowly avoiding recession thanks to a strong rise in consumer spending and a small boost from foreign trade.
Some economists had feared Germany would sink into recession after the economy contracte 0.1 per cent in the second quarter.
The export-oriented economy has been hit by mounting tensions with Russia over the Ukraine crisis and also, to a lesser degree, by the conflicts in the Middle East.
Organisations including the OECD and the IMF have slashed their growth forecasts for Germany, as has the government, which now expects an expansion of just 1.2 per cent this year and 1.3 per cent in 2015.