German business activity hits 18-month low in June, PMI shows

By Maria Martinez

BERLIN, June ‌23 (Reuters) - Germany's ​private ​sector activity contracted at its fastest pace in 18 months in June as the services downturn deepened, ‌a survey showed on Tuesday.

The Composite Flash Purchasing ⁠Managers' Index for Germany, compiled by S&P Global, fell to 48.0 in ‌June from 48.8 in May, ‌below the expectations of analysts polled by Reuters that it would be at 49.6.

The 50-mark separates growth from contraction.

"The ​bad news is that business activity has fallen for a third month running and at the quickest rate ⁠in this sequence, thereby further increasing the likelihood of the economy having slipped back ​into contraction in the second quarter," said Phil Smith, economics associate director at S&P Global Market ​Intelligence.

SERVICES LEAD THE DECLINE AGAIN

The flash ‌services PMI fell to 46.8 from 48.1, its lowest since November 2022.

"The service sector continues to ⁠act as a notable drag on the economy, seeing rates of decline in both business activity and new work gather pace ⁠in June," Smith said.

Meanwhile, the manufacturing PMI edged down to 50.0 from ​50.1.

New business declined for a fourth straight month and at the fastest rate since December 2024.

"The good news is that inflationary pressures have ‌started to ease off," Smith said. Input cost inflation eased to a four-month low, while firms' ‌output price inflation slowed to its weakest pace in three ⁠months.

Business expectations for the ‌coming 12 months weakened ​slightly overall and remained below the long-run trend, the survey showed.

(Reporting by Maria Martinez; Editing by Joe ‌Bavier)

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