German services sector loses some shine as growth slows -PMI

BERLIN (Reuters) – Growth in Germany’s services sector slowed in June amid signs a recent resurgence in demand was losing steam, a survey showed on Wednesday.

The HCOB final services Purchasing Managers’ Index (PMI) fell to 54.1 in June from a 13-month high of 57.2 in May, but it remained comfortably above the 50 level that signals growth in activity.

The slower growth comes as no surprise, as France, Italy and Spain had already started to see a loss of momentum a month earlier, said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

“It was also inevitable that the decline in demand in the manufacturing sector, which began in the middle of last year, would have to leave its mark on the service sector at some point,” he said.

On average, companies in Europe’s biggest economy continued to expect growth in the future, even if they were less optimistic about this than in May.

At the same time, companies hired slightly more staff than in the previous month, which also signals a degree of confidence, the report said.

However, the composite PMI index, which comprises services and manufacturing, fell sharply to a five-month low of 50.6 in June, from 53.9 in May.

The composite PMI showed solid growth in the overall economy in the second quarter, but in June the index was only just above the growth threshold.

“Germany will probably escape a continuation of the recession that set in during the fourth quarter of last year. However, the risk of the economy slipping into recession again in the second half of the year has increased,” de la Rubia said.

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