Germany August flash manufacturing PMI 49.8 vs 48.2 expected

• Prior 49.3
• Services PMI 48.2 vs 49.0 expected
• Prior 49.7
• Composite PMI 47.6 vs 47.4 expected
• Prior 48.1

There’s a bit of a constrast to the report as the manufacturing print was better than estimated but the services print was more disappointing. But when put together, it still points to a further contraction in the German economy in August and I don’t see that as being any comfort whatsoever.

The euro jumped slightly from 0.9905 to 0.9930 but really there isn’t any reason to cheer the data. Economic activity is seen contracting at a faster pace this month than in July, with new business declining for a third straight month i.e. weaker demand and export sales were also weak overall. S&P Global notes that:

“The PMI data paint a bleak picture of the German economy midway through the third quarter, showing a deepening decline in private sector business activity. Continued weakness in manufacturing is being compounded by a slowdown in the service sector, with surveyed businesses reporting a growing strain on demand from high inflation and increased interest rates.

“The slowdown in the economy is increasingly taking a toll on firms’ hiring activity, with employment growth easing to its weakest for almost a year-and-a-half in August. A first fall in backlogs of work for more than two years points to capacity pressures across Germany’s private sector economy starting to ease and represents a downside risk to job creation going forward.

“Positively, August’s data provided evidence of a further easing of both supply side constraints and cost increases, which helped to lift business confidence from July’s recent low. However, with the threat of an energy crisis still looming large, the outlook remains riddled with uncertainty.”