German business activity unexpectedly contracted in July, preliminary data showed, as businesses were hit by inflationary pressures and supply chain disruptions.
The S&P Global services PMI fell to 49.2 points in July from 52.4 points in June, while the manufacturing index fell to 49.2 points from 52 the previous month.
Analysts had expected both services and manufacturing this month to come in higher than 50 points, signaling an increase in activity to 51.2 and 50.6 respectively.
The composite index, which tracks both manufacturing and the services sector, fell to 48 points, the lowest level in two years, from 51.3 points the previous month.
If confirmed in the final PMI reading at the end of the month, it would be the first decline in business activity since last December.
“Having experienced a boost from the earlier easing of coronavirus restrictions, various challenges pushed the German economy into recession territory for the first time in 2022 to date,” an S&P Global analyst said.
Uncertainty caused by the war in Ukraine, ongoing supply delays and inflation and its pressures are behind the worst performance in private sector activity since the peak of the first wave of the pandemic in spring 2020, he said. .
Source: Capital
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