- Composite PMI 46.9 vs 47.6 prelim
The revision lower doesn't provide much comfort for the German economy as activity contracts for a second month running, with the outlook already rather bleak heading into the winter months. The only positive is that inflation pressures were seen easing from record highs but employment conditions are at the weakest in 18 months. S&P Global notes that:
"After providing important support to the economy during the opening half of the year, business activity across Germany's service sector has started to falter during the third quarter as domestic demand comes under pressure from sky-high inflation and wavering confidence.
"August's PMI showed the downturn in services activity gather pace, which, alongside continued weakness in manufacturing, increases the likelihood of an overall contraction in the economy in the third quarter.
"Efforts by services firms to plug staffing gaps meant that employment rose again during August, but the rate of job creation slowed to its lowest in a year-and-ahalf as weaker demand suppressed firms' appetite for recruitment.
"Although business confidence picked up in August, it remains historically subdued overall due to the current high level of economic uncertainty, not least around the energy situation.
"Further slowdowns in the rates of increase in both input costs and output charges suggest that underlying price pressures may have passed their peak due in part to falling demand, though the renewed surge in wholesale gas prices in recent weeks brings fresh upside risks to inflation ."
