German Economy Held Back by Weakest Services Growth in 15 Months

(Bloomberg) -- Germany’s economy lost some momentum this month as manufacturing cooled and the services sector posted its weakest performance in 15 months.

IHS Markit’s composite Purchasing Managers’ Index fell to

54.4 from 55.3 in July. The decline was steeper than economists forecast, though the measure remained well above the 50 level that divides expansion from contraction. The services gauge dropped to 53.3 -- the lowest since May 2015 -- from 54.4, and confidence in the sector was close to a two-year low.

Markit said the report signalled that business conditions “have become a bit more challenging,” though it expects continued economic growth. Germany, Europe’s largest economy, expanded 0.4 percent in the second quarter and has shown signs of being largely unaffected by the U.K.’s Brexit vote in June.

“The long-standing theme of solid economic growth in Germany continued in August,” said Oliver Kolodseike, an economist at Markit.

Germany’s factory PMI slipped to 53.6 this month from 53.8 in July, but manufacturing new orders rose at the fastest pace in 2 1/2 years.

In France, an improvement in the services sector helped to push its composite Purchasing Managers’ Index to a 10-month high of 51.6 in August from 50.1 in July. The gauge for the euro area is forecast to slip to 53.1 from 53.2. Markit will publish that report at 9 a.m. London time.

To contact the reporter on this story: Fergal O’Brien at  fobrien@bloomberg.net.

To contact the editors responsible for this story: Craig Stirling in London at cstirling1@bloomberg.net, Andrew Atkinson