German flash manufacturing PMI drops to 15-month lows in May

The German economy grows at the weakest pace in fifteen months in May, the latest manufacturing and services activity surveys from IHS/Markit research showed.

German manufacturing purchasing managers index (PMI) slumped to fifteen-month lows in May, coming in at 56.8 while services PMI dropped to 20-month lows at 52.1 versus 53.0 last.

The IHS Markit Flash Germany Composite Output Index fell to a 20-month low of 53.1 in May, from April’s 54.6.

Key comments from Phil Smith, Principal Economist at IHS/Markit:

“The flash PMI data indicate that the recent slowdown in Germany’s private sector continued into May. Business activity showed the weakest rise for over a year-and-a-half, and it was a case of slower growth across both the manufacturing and services segments of the economy.
“There was some anecdotal evidence suggesting that the timing of public holidays during the month had led to workers taking days off to bridge the holidays and weekends. However, weaker order book growth and a further waning of business confidence point to the economy carrying a lot less underlying momentum than at the end of 2017.
“Latest data meanwhile indicated an ill-timed resurgence in cost pressures faced by businesses, linked largely to rising oil prices. The recent cooling of demand has meant increased pressure on margins, with selling price inflation moving in the opposite direction to that of input costs.”

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