German flash manufacturing PMI slumps to 52.3 in Oct, 29-month lows

German business activity grew at the weakest pace in three and a half years in the month of October, the latest manufacturing activity report from IHS/Markit research showed.

German manufacturing purchasing managers index (PMI) dropped sharply in October, coming in at 52.3 while services PMI also fell to five-month lows of 53.6 versus 55.9 last.

The IHS Markit Flash Germany Composite Output Index hit forty-one-month lows at 52.7 in October, from September’s 55.0.

Key comments from Phil Smith, Principal Economist at IHS Markit:

“October’s flash PMI results made for unpleasant reading, with data showing slowdowns in rates of growth across all the main measures of business performance: output, new orders and employment. The rise in overall business activity was the weakest in almost three-and-a-half years, reflecting not only a further easing of manufacturing production growth, but also a slowdown in the previously steadfast service sector.”

“Growth in the manufacturing sector has been slowing for some time now, so it isn’t surprising to see that weakness spilling over into services given the interconnectivity between the two.”

“Notably, manufacturing order books fell into contraction at the start of the final quarter following almost four years of uninterrupted growth. The survey’s anecdotal evidence highlighted the car industry as an area of weakness, while also indicating a further pullback in orders from abroad.”