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German service sector growth at 20-month low in May- Markit

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Growth in Germany's services sector slumped to the slowest pace in 20 months in May, a survey showed on Tuesday, suggesting that Europe's largest economy was losing momentum.

[BERLIN] Growth in Germany's services sector slumped to the slowest pace in 20 months in May, a survey showed on Tuesday, suggesting that Europe's largest economy was losing momentum.

Markit's final services index fell to 52.1 from 53.0 in April. It was the fourth consecutive monthly drop from a near seven-year high in January, although the index remained above the 50 line that separates growth from contraction.

Markit blamed the decline on modest growth in new orders and a slowdown in job creation, which sank to its lowest level in more than two years.

"The German economy is in a cooling-down phase, with business activity continuing to rise, but at a more moderate rate with each passing month," said IHS Markit economist Phil Smith.

"With so many businesses currently working at or close to full capacity, the loss of working days due to the timing of public holidays probably had a more discernible impact on activity than in years gone by, and contributed to the weaker growth performance in May," it added.

"But regardless of any special factors, the survey's measures of new orders and business confidence have also both fallen to multi-month lows, indicating increased risks to the outlook."

As a result, Markit's final composite Purchasing Managers' Index, which tracks the activity in manufacturing and services that together account for more than two-thirds of the economy, fell to a 20-month low of 53.4 from 54.6 in April.

REUTERS

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