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)