German PMI Shows 15 Month Low Growth

German manufacturing expanded at the slowest pace in 15 months in September as new orders fell, signaling uneven momentum in Europe’s largest economy.

Markit Economics said its Purchasing Managers Index fell to 50.3 from 51.4 in August, the weakest since June 2013. Economists surveyed by Bloomberg News predicted a drop to 51.2. A gauge of services rose to 55.4 from 54.9, offsetting the drop in factory output and pushing the composite index up to 54 from 53.7. A reading above 50 indicates expansion.

The data add to the uncertainty facing the German economy. While gross domestic product unexpectedly contracted in the second quarter, the Bundesbank said yesterday that positive July data had dispelled fears of an abrupt end to the country’s upturn. In June, Germany’s central bank predicted growth of 1.9 percent this year and 2 percent in 2015.

“Weak manufacturing data have become one of the most conspicuous features of the fragility of a broad-based recovery,” said Oliver Kolodseike, an economist at Markit. The data “paint a mixed picture of the health of the German economy at the end of the third quarter.”

A gauge of new orders at factories contracted for the first time since June 2013, falling to 48.8 from 51.1, the data showed.

Confidence in Europe’s largest economy has declined in recent months as tensions with Russia threatened trade and a slowing recovery in the euro-area dimmed export prospects. The Munich-based Ifo institute’s business climate index, due for release tomorrow, will probably show sentiment at companies fell to the lowest in 16 months in September.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza