German private sector growth brushes off Brexit, hits year-high in July: PMI
Reuters
Published Jul 22, 2016 03:35AM ET
German private sector growth brushes off Brexit, hits year-high in July: PMI
BERLIN, (Reuters) - German private sector growth hit its highest level so far this year, a survey showed on Friday, suggesting Europe's biggest economy is brushing off any uncertainty caused by Britain's vote to leave the European Union.
Markit's flash composite Purchasing Managers' Index, which tracks the manufacturing and services activity that accounts for more than two-thirds of the German economy, rose to 55.3 from 54.4 in June.
This was the highest reading since December 2015 and beat a Reuters consensus forecast for 53.7. The headline figure has now been comfortably above the 50 line that separates growth from contraction for 39 months in a row.
The survey showed that growth in the services sector picked up again having slowed in June, while manufacturing lost some steam after a strong showing in the previous month.
"Strong tailwinds from a healthy labor market and rising demand are propelling the economy forward, while businesses so far seem to be unaffected by uncertainties around the UK’s decision to leave the EU," said Markit Economist Oliver Kolodseike.
The uptick in activity contrasts with a plunge in German investor morale in July to its lowest level since 2012, as investors fretted Britain's farewell to the EU could leave its mark on the German economy.
The PMI sub-index for manufacturing inched down to 53.7 as companies saw weaker growth in new business and added staff at a slower rate.
The sub-index for services rose to 54.6 helped by an increase in business activity. However, business expectations in the sector hit a nine-month low, signaling some companies were worried that an economic slowdown could hurt activity.
Despite this, Markit Chief Economist Chris Williamson said the outlook for the German economy was encouraging and it appeared that the Brexit vote was having very little impact.
He added that the PMI pointed to economic growth of 0.5 percent in the third quarter if the index remains at these levels.
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Written By: Reuters
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