German manufacturing activity remained in contraction, but unexpectedly reached a two-month high in August, the latest manufacturing activity report from IHS/Markit research showed this Wednesday.
The German Manufacturing purchasing managers index (PMI) arrived at 43.6 versus 43.0 expected and 43.2 previous. Meanwhile, services PMI hit a seven-month low level of 54.4 as against previous months reading of 54.5 and 54.0 anticipated.
The IHS Markit Flash Germany Composite Output Index came in at 2-month highs of 51.4 in August vs. July’s 50.9 and 50.5 expectations.
Key comments from Phil Smith, Principal Economist at IHS Markit:
“Germany remains a two-speed economy, with ongoing growth of services just about compensating for the sustained weakness in manufacturing. Although improving slightly, the survey’s output data haven’t changed enough to dispel the threat of another slight contraction in GDP in the third quarter, especially given the deterioration in the forward-looking indicators.”
“The headline services business activity index has come down a touch but remains indicative of a robust pace of output growth in that sector. However, cracks are starting to appear elsewhere in the services data, with inflows of new work barely rising in August and business confidence at its lowest for almost five years. Manufacturing expectations have also taken a turn for the worse, and are now at a record low.”
On an unexpected improvement in the German PMI numbers, the buying interest around the EUR picked up pace, sending the EUR/USD pair back above the 1.11 handle.
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