German flash manufacturing PMI drops to 55.9 in June, 18-month lows

German economy grows at the weakest pace in eighteen months in June, the latest manufacturing activity report from IHS/Markit research showed.

German manufacturing purchasing managers index (PMI) fell further to eighteen-month lows in June, coming in at 55.9 while services PMI unexpectedly rebounded to 53.9 versus 52.1 last.

The IHS Markit Flash Germany Composite Output Index hit a two-month high at 54.2 in June, from May’s 53.4

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

“The headline PMI numbers for Germany make for slightly better reading in June thanks to a pick-up in the pace of expansion in the service sector, though the performance over the second quarter as a whole still looks to be one of only modest growth.”

“The big disappoint was manufacturing, where the PMI fell further from last December’s record high to the lowest in one-and-a-half years. A worrying slide in export order growth seen since the start of the year continued into June, with the latest survey’s anecdotal evidence highlighting quieter client interest from the US and China.”

“A clear divergence between manufacturing and services was also seen in the survey’s gauge of business confidence. Services firms are in buoyant mood towards the outlook over the next 12 months, but manufacturers see growth continuing to cool and are their least optimistic for over three years.”