Jun 23, 2022 03:36AM ET
A preliminary survey showed on Thursday that the German economy, Europe's largest, lost much of its momentum at the end of the second quarter, with falling exports acting as a drag and economic uncertainty and inflation weighing on domestic demand.
S&P Global's purchasing managers' index (PMI) for the services sector fell to 52.4 in June from 55.0 in May, but was still above the 50 mark, indicating growth for the sixth consecutive month. Analysts had expected a decline to 54.5.
The flash manufacturing PMI fell to 52.0 from 54.8 in May, below the 54.0 expected by analysts in a Reuters poll.
That meant the combined flash PMI, which tracks the manufacturing and services sectors that together account for more than two-thirds of the German economy, was below the 53.1 expected by analysts, falling to 51.3 from 53.7 in May.
Phil Smith, associate director economics at S&P Global, said the June PMI data showed the German economy had lost virtually all the momentum it had gained from the easing of coronavirus-related restrictions, with growth in the services sector cooling sharply for the second month in a row in June.
A broad-based decline in demand was marked by a mounting drop in manufacturing new orders, which coincided with the first decline in services new orders in six months, as rising prices and heightened levels of uncertainty took their toll, he said "Thanks to a particularly bleak outlook for manufacturing, business confidence in future economic activity is now at its lowest level since the first wave of the pandemic two years ago," Smith said, adding that this is translating into a broad-based slowdown in job creation as companies reassess their staffing needs.
About 800 companies were surveyed June 13–21.