German business activity deteriorates in Jan -PMI By Reuters

German business activity deteriorates in Jan -PMI By Reuters

© Reuters. FILE PHOTO: A steel worker in heat protection gear is silhouetted against the fire of a furnace at the steel plant of ThyssenKrupp in Duisburg, Germany, July 26, 2023. REUTERS/Wolfgang Rattay//File Photo

BERLIN (Reuters) – Germany’s economic downturn worsened this month with both manufacturing and services activity contracting, a preliminary survey showed on Wednesday.

The HCOB German Flash Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, fell for the seventh consecutive month to 47.1 in January from December’s 47.4, below the 47.8 forecast by economists.

A reading below the 50 level points to a contraction in business activity.

The composite PMI index tracks the services and manufacturing sectors that together account for more than two-thirds of the German economy.

“Germany has faced a sluggish start to the new year,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

Business activity in the services sector fell to a 5-month low of 47.6 in January from 49.3 in December, below analysts’ forecast of 49.5.

“Services activity has not only declined for the fourth consecutive month but has also accelerated in its downturn,” de la Rubia said.

The manufacturing PMI rose to 45.4 from 43.3 in December, above analysts’ expectations of 43.7, but still in contraction territory.

The survey showed continued broad-based weakness in demand but with limited spillover to the labour market.

Red Sea reroutings are having an impact on supply chains of the manufacturing sector as evidenced by the strong fall in the delivery times sub-index, de la Rubia said.

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