German flash manufacturing PMI drops to 44.3 in May, surprises negatively

German manufacturing activity deteriorated further in May, the latest manufacturing activity report from IHS/Markit research showed this Thursday.

The German manufacturing purchasing managers index (PMI) fell further into contraction territory and arrived at 44.3 versus 44.8 expected and 44.4 previous. Meanwhile, services PMI dropped to a four-month low level of 55.0 as against previous months reading of 55.7 and 55.5 anticipated.

The IHS Markit Flash Germany Composite Output Index hit 3-month highs of 52.4 in May, up from 52.2 booked in April and 52.0 expectations. 

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

“At 52.4, the headline Germany PMI remains in modest growth territory in May, indicating that the economy is course to see sustained expansion in Q2 following the rebound of GDP in the opening three months of the year.”

“May data for the service sector were slightly less punchy than in recent months, with business activity, new orders and employment all rising more slowly. Thankfully, the manufacturing indicators for output, orders book and export sales have all picked up further from their low points in the first quarter, albeit remaining among the weakest since 2012. However, goods producers’ increased efforts to streamline workforces means that factory job numbers are now falling at the steepest rate in over six years.”