German service sector activity shrinks in Aug for first time in 2023 -PMI
FILE PHOTO: A waiter carries a tray of roast chicken during the opening day of the 181st Oktoberfest in Munich September 20, 2014. REUTERS/Lukas Barth/File Photo
BERLIN (Reuters) — Activity in Germany’s services sector contracted in August for the first time this year, a survey showed on Tuesday.
The HCOB final services Purchasing Managers’ Index (PMI) fell to 47.3 in August from 52.3 in July, sliding below the 50 level that signals growth in activity.
Businesses reported a sustained weakening of demand amid a backdrop of economic uncertainty and strong inflationary pressures, according to the report.
«There is something odd occurring in the German service economy: activity is slowing down, but prices are revving up,» said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
For him, the explanation was that labour-dependent services were probably feeling the heat of major wage increases.
Business expectations in the service sector picked up slightly but remained historically subdued, which was reflected in near-stalling job creation, the report showed.
The composite PMI index, which comprises services and manufacturing, fell to 44.6 in August from 48.5 in July, posting its lowest reading since May 2020, when the COVID-19 pandemic brought business almost to a halt in many parts of the world.
«There was this final shot of hope, that the service sector may continue to provide some stabilisation to the overall economy. This optimism proved short-lived,» de la Rubia said, forecasting a 0.8% gross domestic product contraction in the third quarter.
