Germany’s services sector nears stabilization in June

The report from IHS Markit revealed on Friday that the decline in the activity in Germany’s services sector eased to the weakest during the coronacrisis so far.

According to the report, the headline seasonally adjusted IHS Markit Germany Services PMI Business Activity Index came in at 47.3 in June, up from 32.6 in May and compared economists’ forecast of 45.8. This was the highest reading since February, but it still pointed that business activity was subdued across all parts of the services economy, amid widespread reports of a general lack of demand. That said, there was evidence of activity gradually returning to those sectors previously shut down, and to the Hotels & Restaurants sector in particular. Lower inflows of new business were recorded across the services economy for the fourth month in a row in June, and export business remained particularly weak due to travel restrictions. Employment fell again in June, but the decline was the weakest in the current four-month sequence of retrenchment. Meanwhile, sentiment was back in positive territory for the first time since February amid growing hopes of a return to more normal conditions over the next 12 months.

The Germany Composite Output Index, a weighted average of the Manufacturing Output Index and the Services Business Activity Index, climbed from 32.3 in May to a four-month high of 47.0, but fell short of signaling a return to growth