BLBG: Germany Loses Further Momentum as Manufacturing, Services Weaken
Germany’s economy stuttered again this month, with a gauge of output falling more than economists forecast to the lowest this year.
Markit Economics said its composite index of services and manufacturing dropped to 52.8 from 54.1 in April. While that’s above the 50 mark that divides expansion from contraction, it’s the second straight decline and was less than the reading of 53.8 forecast by economists in a Bloomberg survey.
German economic growth cooled to 0.3 percent in the first quarter, held back by a drag from trade, and Markit’s report showed that manufacturing export orders recorded only a “marginal” increase this month. At the same time, a rebound in oil prices and a weak euro pushed up input prices by the most in more than 2 1/2 years.
“It looks as if this rate of expansion of the German economy will remain sluggish in the months ahead,” said Oliver Kolodseike, an economist at Markit. “Companies reported weaker expansions in both output and new orders, with some survey participants commenting on weak demand, economic uncertainties and rising cost pressures.”
Markit’s manufacturing index for Germany fell to a three-month low of 51.4 this month from 52.1 in April. The services measure slipped to 52.9 from 54.
In a separate report on Thursday, Markit said France’s economic recovery showed signs of strengthening this month. Its composite gauge of manufacturing and services rose to 51 from 50.6 in April. The reading was in line with the median forecast of economists surveyed by Bloomberg.
The International Monetary Fund said this week that France’s recovery is “solid” for now, though President Francois Hollande needs to push through further reforms in order to secure prosperity and cut unemployment.
Markit will publish its measures for the 19-nation euro-area at 9 a.m. London time. The composite is forecast to have held at 53.9, according to a survey.
