German business activity contracts in July, PMI shows

GERMAN business activity contracted unexpectedly in July, following three months of expansion, a preliminary survey showed on Wednesday (Jul 24).

The HCOB German flash composite Purchasing Managers’ Index, compiled by S&P Global, fell to 48.7 in July from 50.4 in June, well below the 50.7 forecast in a Reuters poll.

The composite index, which tracks the services and manufacturing sectors that together account for more than two-thirds of the eurozone’s largest economy, is now below the 50 mark that separates growth from contraction.

The services sector index eased in July to 52.0 from 53.1 in June. Analysts polled by Reuters expected the index to rise to 53.3.

Manufacturing remained mired in a downturn, tumbling further to 42.6 in July from 43.5 in June. Analysts polled by Reuters had expected the index would rise to 44.0.

“This looks like a serious problem,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

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“Germany’s economy fell back into contraction territory, dragged down by a steep and dramatic fall in manufacturing output. The hope that this sector could benefit from a better global economic climate is vanishing into thin air.” REUTERS