• Prior 54.8
  • Services PMI 52.4 vs 54.5 expected
  • Prior 55.0
  • Composite PMI 51.3 vs 53.1 expected
  • Prior 53.7

After the weak French readings earlier, Germany is also suffering from a big knock to activity in June. Falling exports and strong inflation pressures weigh on economic conditions, as the outlook becomes increasingly gloomy. The manufacturing reading is a 23-month low with the services and composite readings seen at 5 month and 6 month lows respectively. Ouch.

The euro is taking an added hit from this with  EUR/USD  falling from 1.0530 to 1.0507. The dollar is catching a broader bid alongside the yen as a result, as risk sentiment takes a knock.

S&P Global notes that:

“June’s flash PMI data show that Germany’s economy has lost virtually all the momentum gained from the easing of virus related restrictions, with growth in the service sector cooling sharply for the second month in a row in June.

“But perhaps the biggest cause for concern is a broadbased decline in demand, with a deepening downturn in manufacturing new orders coinciding with a first fall in service sector new business for six months, as rising prices and elevated levels of uncertainty take a toll. Activity is still being supported to some extent by workloads built up earlier in the year, however.

“Price pressures remain historically elevated. However, there are signs that businesses might be finding it increasingly difficult to pass on higher costs to customers, with average prices charged for goods and services rising at the slowest rate for three months despite a quicker increase in input costs that the survey in part linked to rising wage pressures.

“Thanks to a particularly grim outlook for the manufacturing sector, business confidence towards future activity is now at its lowest since the first wave of the pandemic two years ago, and we’re seeing this translate into a broad-based slowdown in job creation as companies start to reassess their staffing needs going forward.”