The final composite output index for June weighed in at 50.6, down from its 50.8 flash estimate and well short of the final 53.9 recorded in May. The signs are that economic growth was positive, but only just.

Services remained relatively robust with a final sector PMI of 54.1, unchanged from its flash print and well above the 50-expansion threshold. That said, it was still well down on May's final 57.2. New business expanded for a fifth straight month, but growth was the weakest since February and export demand decreased for the first time in three months. Still, job creation was slightly stronger than in May and this led to a fall in outstanding business for the first time in five months. However, business sentiment continued to deteriorate and hit its lowest level so far in 2023. High inflation and concerns about broader economic conditions were largely responsible.

Cost inflation fell again but expenses still rose significantly, largely due to higher wages. In turn, a decline in the rate of output price inflation masked another sizeable increase in prices charged.

The German economy probably moved out of recession in the second quarter but solely due to the buoyancy of services. High inflation, rising interest rates and a clearly struggling manufacturing sector remain a threat to the medium-term outlook. Today's update leaves both the German ECDI (minus 18) and ECDI-P (minus 29) well below zero and so indicative of overall economic activity continuing to lag market expectations.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global.

The Purchasing Managers Index (PMI) survey has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the European Central Bank) use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.