The German economy accelerated its downturn in August and appears to be heading for a recession. The Purchasing Managers Index for the entire private sector — that is, manufacturing and services — fell from 48.5 to 44.7 points from the previous month, financial services firm S&P Global announced on Wednesday in its monthly survey of some 800 companies. . It was the fourth consecutive fall. At the same time, the lowest value since May 2020 was reached.
Economists surveyed had only expected a drop to 48.3 points. With the sharp fall in August, the growth threshold of 50 points is now far away.
Industrial production fell sharply
The main reasons for the rapid decline were the accelerated decline in industrial production and the losses of new companies in the service sector. The service sector barometer fell below the growth threshold: from 52.3 points in July to 47.3 points in August.
“The hope that the service providers could save the German economy has evaporated. Instead, the services sector is poised to join the industrial recession that appears to have started in the second quarter,” said chief economist Cyrus de la Rubia of the Hamburg Commercial Bank (HCOB), which is sponsoring the study.
However, according to estimates by the Deutsche Bundesbank, the German economy will tread water this summer. In late 2022 and early 2023, gross domestic product (GDP) had contracted and only stagnated in the spring. However, the Bundesbank believes that the recovery in private consumption should continue as a result of strong wage increases coupled with declining inflation rates. Service providers will also receive an impulse from this.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
