German private sector expands at slower pace in October

PMI shows economy is still expanding, but growth eases slightly

Stronger growth in Germany’s manufacturing sector was encouraging, Markit said.

Stronger growth in Germany’s manufacturing sector was encouraging, Markit said.

Thu, Oct 24, 2013, 09:12

Germany’s private sector grew at the slowest pace in three months in October, a survey showed today, in a sign that Europe’s largest economy is expanding, but only moderately.

Markit’s preliminary composite Purchasing Managers’ Index (PMI), which tracks growth in both the manufacturing and services sector and covers more than two-thirds of the economy, slipped to 52.6 in October from 53.2 the previous month.

The reading was above the 50 mark that separates growth from contraction for a sixth straight month, but marked the lowest level since July as the services sector performed less well than expected.

“Germany’s private sector started the final quarter of 2013 in a positive fashion,” said Tim Moore, an economist at Markit. “A slower rate of expansion in services activity meant that overall growth eased slightly from the trend recorded over the third quarter.”

After suffering a subdued start to 2013, the German economy expanded 0.7 per cent in the April to June quarter thanks mainly to domestic demand. Economists expect it to have grown at a slower pace in the third quarter.

“We are looking at 0.4 per cent in the third quarter, possibly 0.3 in the fourth,” said Markit chief economist Chris Williamson.

The index tracking the services sector dropped to 52.3 from 53.7 in September, missing the consensus forecast in a Reuters poll of 25 economists for a rise to 53.9 as firms cut jobs and growth in new business slowed.

Mr Williamson said this disappointing figure suggested that the domestic economy was not performing that strongly due to cautiousness among consumers, although it is still expected to drive overall growth this year, helped by a strong labour market, solid wage hikes and favourable financing conditions.

But stronger growth in the manufacturing sector was encouraging, said Mr Williamson. The index tracking the manufacturing sector was in expansion territory for the fourth consecutive month, rising in line with expectations to 51.5 from 51.1 in September.

New orders in the manufacturing sector continued to grow although contracts from abroad expanded at a more subdued pace. Earlier this month, Germany’s trade association slashed its forecast for full-year export growth to less than 1 percent from a previous estimate of 3 per cent. (Reuters)

Sign In

Forgot Password?

Sign Up

The name that will appear beside your comments.

Have an account? Sign In

Forgot Password?

Please enter your email address so we can send you a link to reset your password.

Sign In or Sign Up

Thank you

You should receive instructions for resetting your password. When you have reset your password, you can Sign In.

Hello, .

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

Thank you for registering. Please check your email to verify your account.

We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.