German private sector growth slows in July: PMI

[BERLIN] Germany's private sector grew at a slightly slower rate in July than in the previous month, a survey showed on Friday, suggesting that Europe's largest economy lost some steam at the beginning of the third quarter.

Markit's flash composite Purchasing Managers' Index (PMI) tracking manufacturing and services activity which accounts for more than two-thirds of the German economy inched down to 53.4 from 53.7 in June.

That was still comfortably above the 50 mark that separates growth from contraction and marked the 27th consecutive month of economic expansion.

Markit's chief economist Chris Williamson said the Greek debt talks and fears that a euro zone member might be forced to leave the currency union had led to some wavering of business confidence in Germany. "But this effect was minor. And by next month we should see things picking up again now that the Grexit fears have been allayed," he added.

The German manufacturing index slid to 51.5 from 51.9 in June, undershooting a Reuters poll consensus for a steady 51.9. Despite the weaker euro, new export business placed with German manufacturers declined for the first time since January.

Mr Williamson linked this "export underperformance" to weaker demand from the United States and Asia. He also pointed to other euro zone countries like Spain and Ireland which are becoming more competitive and winning some business from German firms.

The sub-index for services was broadly steady at 53.7 after 53.8 last month. The polled analysts had forecast 53.9.

The German economy is likely to have grown by around 0.3 per cent in the second quarter with domestic demand being the main driver and foreign trade picking up, the finance ministry said on Monday.

The government forecast is slightly lower than the ones from leading economic institutes, with the Ifo predicting second quarter growth of 0.4 per cent and the DIW around 0.5 per cent.

REUTERS