German Business Activity
German business activity expanded slightly in August, driven by a recovery in manufacturing, according to the S&P Global Flash Composite PMI Index. The index fell to 51.0 from 51.3 in July. It remains above the 50 mark that indicates growth. Economists had expected no change, forecasting a reading of 51.3.
The manufacturing PMI rose significantly to 54.1 from 52.2. This marks the strongest growth in 51 months. In contrast, the services PMI declined to 48.5 from 49.8. This indicates a contraction in the services sector for the fifth consecutive month. Phil Smith, economics associate director at S&P Global Market Intelligence, noted that while services remain a drag on growth, there are signs of improvement. These include a slight uptick in new business and a rise in employment in the sector.
Employment levels remained unchanged after 26 months of decline. There was a modest increase in services staffing, coinciding with the slowest pace of factory job cuts in over a year. Business expectations also improved, reaching their highest level since before the outbreak of the US-Israeli war on Iran in February.
Indian Private Sector Recovery
In India, the private sector saw a moderate recovery in August. The HSBC Flash India Composite PMI Output Index rose to 54.6 from July's 52-month low of 54.3. This indicates a rebound in growth, particularly in the services sector, which outpaced manufacturing. However, the overall growth rate remains subdued compared to previous years. Pranjul Bhandari, chief India economist at HSBC, stated that while new orders and output increased, market conditions and competitive pressures continued to challenge growth.
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The modest growth in German manufacturing could support the euro. However, the contraction in services may weigh on broader economic sentiment. In India, the recovery in the private sector could bolster investor confidence, particularly in service-related stocks. Watch for upcoming PMI data releases to gauge further trends in both economies.
Based on reporting by: businesstimes.com.sg, livemint.com