The decline in German industry accelerated slightly at the beginning of the second half of the year
The slowdown in the German industry has accelerated slightly, according to a survey at the start of the second half of the year. The purchasing managers' index for the sector fell for the second month in a row, dropping to 43.2 points in July from 43.5 in June, according to financial services provider S&P Global on Thursday, based on final data from its business survey.
Preliminary figures had shown a slightly lower reading of 42.6. The barometer, which assesses business conditions through purchasing managers' surveys, is closely watched by financial markets as a leading indicator for economic growth. It signals growth when above 50.
The main reason for the barometer's renewed decline, according to S&P Global, was a sharper drop in production. New orders and employment also fell more significantly than in the previous month, reflecting less optimistic business outlook for the coming year. Meanwhile, prices have been stabilizing, with input prices falling only moderately and to the lowest level in one and a half years. There were reports that higher transport costs had partially offset lower commodity prices.
The German economy unexpectedly shrank in the second quarter. Gross domestic product fell by 0.1 percent quarter-on-quarter from April to June. Prospects for a recovery in the second half of the year have recently dimmed, with the Ifo business climate index - considered the most important leading indicator for Europe's largest economy - falling for the third month in a row, which is seen as a negative sign for the economic outlook.
The results of the survey indicated a continued decline in the German industry, with the purchasing managers' index for the sector falling for the second consecutive month. The German economy's prospects for a recovery in the second half of the year have been affected by the outcomes of several surveys, including the recent decline in the Ifo business climate index.
