German Preliminary Manufacturing PMI drops to 52.0 in June vs. 54.0 expected

The German manufacturing and services sectors slowed their pace of expansion in June amid falling exports and strong inflation, the preliminary manufacturing activity report from S&P Global/BME research showed this Thursday.

The Manufacturing PMI in Eurozone’s economic powerhouse came in at 52.0 this month vs. 54.0 expected and 54.8 prior. The index slumped to 23-month lows.

Meanwhile, Services PMI dropped from 55.0 booked previously to 52.4 in June as against the 54.5 estimated. The PMI registered the lowest level in five months.

The S&P Global/BME Preliminary Germany Composite Output Index arrived at 51.3 in June vs. 53.1 expected and May’s 53.7. The gauge reached six-month troughs.

Key comments from Phil Smith, Economics Associate Director at S&P Global

“June’s flash PMI data show that Germany’s economy has lost virtually all the momentum gained from the easing of virus-related restrictions, with growth in the service sector cooling sharply for the second month in a row in June.”

“But perhaps the biggest cause for concern is a broad-based decline in demand, with a deepening downturn in manufacturing new orders coinciding with a first fall in service sector new business for six months, as rising prices and elevated levels of uncertainty take a toll. Activity is still being supported to some extent by workloads built up earlier in the year, however.”

FX implications

EUR/USD is holding the lower ground near 1.0520, down 0.45% on the day. The spot caught a fresh selling wave as the downbeat French and German PMIs ring recession bells.