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Back OfficeEconomic Buzz: German private sector ekes out further marginal growth in July
Underlying demand continued to show a steady recovery, with services firms noting the first increase in new business in almost a year. Business expectations meanwhile picked up to their highest since May 2024, but employment nevertheless posted a further modest decline.
On the price front, inflationary pressures were shown to have eased across the eurozone's largest economy. The rates of increase in both input costs and average charges for goods and services reached their lowest since October last year, reflecting a sustained cooling of service sector price pressures.
The HCOB Flash Germany Composite PMI Output Index registered 50.3 in July, coming in just below June's reading of 50.4 and remaining slightly above the 50.0 no-change threshold.
Higher production levels were recorded in the manufacturing sector for the fifth month in a row at the start of the third quarter. That said, the rate of growth was the weakest in this sequence and only marginal overall (index at 50.6). This was partly offset by a stabilisation of activity in the service sector (index at 50.1) following three months of contraction.
The marginal increase in business activity in July was supported by a similarly small rise in total new business. In line with signs of a pick-up in underlying demand, latest data showed an improvement in firms' growth expectations for the coming year.
In line with signs of a pick-up in underlying demand, latest data showed an improvement in firms' growth expectations for the coming year. The scaling back of workforces was consistent with signs of spare capacity across the private sector, as evidence by a further decrease in backlogs of work in July.
The rate of increase in input costs slowed for the sixth month in a row to the weakest since last October. Average prices charged for goods and services likewise rose more slowly in July.
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