Germany’s services sector expands at faster pace in August

The report from IHS Markit revealed on Wednesday that activity in Germany’s services sector expanded in August at a faster pace than in July.

According to the report, the headline seasonally adjusted IHS Markit Germany Services PMI Business Activity Index came in at 54.8 in August, up from July's six-month low of 54.5 and compared with a historical series average of 53.3.

Though overall business activity remained solid, there were signs of underlying demand becoming increasingly fragile, the report noted. Total volumes of new business across the service sector rose only modestly and at the weakest rate since January. In addition, the expectations for future activity reached the lowest since October 2014 and was only just inside the positive territory. On the price front, input prices increased steeply and at a rate that was little-changed from the month before. Average prices charged were raised accordingly, with the rate of inflation likewise broadly in line with that recorded in the previous survey period and above the historical average.

Germany Composite Output Index, a weighted average of the Manufacturing Output Index and the Services Business Activity Index, tick up to 51.7 in August from July's 50.9, supported by the combination of marginally faster service sector business activity growth and a slower decline in manufacturing production. Nevertheless, the latest reading was still one of the lowest seen over the past six years.