Germany may have fallen into recession in September, services PMIs show

Andrew Cummings
October 3, 2019

Its activity index sank below the 50 no-change benchmark to 49.5 in September - a sign of shrinking output - and follows even steeper declines for manufacturers and builders.

The final Jibun Bank Japan Services Purchasing Managers' Index (PMI) dropped to 52.8 in September from 53.3 in August on a seasonally adjusted basis, the same as last week's preliminary reading.

The UK construction industry is stuck in a "devastating" downturn, with new figures showing the sector's output shrinking further in September. Delivery time decreased slightly to an eight-month low.

Consumer demand, buoyed by record-low unemployment and rising wages, has been a bright spot in the British economy.

"Sales have now dropped for 15 successive months and, whilst the level of sentiment was positive overall, many panelists noted that uncertainty in the economy dampened their forecasts for future activity", David Owen, economist at IHS Markit, said. "After a relentless six-month decline in order books driven by Brexit uncertainty and political indecision, this is hardly surprising".

Employment and purchasing activity declined in September.

Despite this, input prices continued to rise at a strong rate during September.

Weakest expectations for activity since July 2016.

"Low confidence has subsequently caused construction order books to fall substantially".

Construction firms also said they were "mildly optimistic" that business will improve over the next 12 months, but would be dependent on the Brexit outcome and economic trends improving worldwide.

"A historically steep drop in new orders was also registered, while firms trimmed employment at the fastest rate since the end of 2010". We are seeing the biggest decline in new work, new orders and employment levels for a decade, when we were in the middle of a financial crisis.

Williamson said the PMI indicated the bloc's economy would expand 0.1 per cent this quarter at best, weaker than the 0.2 per cent predicted in a Reuters poll last month.

"With this in mind, businesses were more downbeat toward the one-year outlook", he added.

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