|Manufacturing - Level||52.1||51.5||51.9|
|Services - Level||53.8||53.7||54.2|
|Composite - Level||53.4||54.0|
The recovery in the German economy proved less resilient than expected in July. At 53.4 the flash composite output index was 0.3 points short of its final June mark, albeit still indicative of a moderate rate of growth.
The manufacturing PMI dropped 0.4 points from its final reading at quarter-end to 51.5 while, at 53.7, its service sector counterpart was just a tick weaker than last time.
However, aggregate new business expanded at a slightly faster pace than in June even if within this, a pick-up in services masked a slowdown in the goods producing category. Backlogs continued to decline but employment was up for a twenty-first consecutive month and more quickly than at any time since March. Nonetheless, services business expectations retreated to equal their lowest level so far in 2015.
Inflation developments were quite muted. Hence, an increase in input charges was small enough to see the rate of cost inflation ease to its weakest point since March while a gentle rise in output prices saw their annual rate unchanged from June.
Overall today's results are in keeping with a relatively steady rate of economic expansion, albeit biased in favour of services. Policymakers at home, and certainly elsewhere in the Eurozone, will be hoping for something rather stronger over the rest of the year.
The Germany PMI (Purchasing Managers' Index) is produced by Markit and is based on original survey data collected from a representative panel of 1000 companies based in the German manufacturing and service sectors. The flash estimate is based on around 85 percent of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data.
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.
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