By Maria Martinez
Germany's Services Sector Growth Slows, Economy at Risk of Recession
In July, Germany's services sector growth slowed for the second consecutive month, signaling a loss of momentum in Europe's biggest economy. The final services Purchasing Managers' Index eased to 52.5 from 53.1 in June, above the 50.0 mark but showing signs of contraction.
Chief economist Cyrus de la Rubia warned that if the service sector stalls, the entire economy could slip into a recession, especially as manufacturing continues to shrink sharply. The recent unexpected contraction in the second quarter has raised fears of a technical recession, defined as two consecutive quarterly declines in gross domestic product.
The survey also revealed the first decrease in employment this year, but business expectations for growth prospects in the coming year improved slightly. On the inflation front, average prices charged by services firms saw the slowest rate of increase since April 2021, though still elevated compared to pre-pandemic levels.
The composite PMI index, combining services and manufacturing, fell to 49.1 in July, slipping into contraction territory. While slightly above a preliminary reading of 48.7, the overall trend is concerning for the German economy.