BERLIN (Reuters) – A sustained rebound in services helped German economic activity grow in May, although there are signs that rising prices, market uncertainty and supply issues are starting to exert pressure. pressure on demand, according to a preliminary survey released Tuesday.
S&P Global’s Flash Purchasing Managers’ Index (PMI) for services was 56.3 in May, down from April’s final reading of 57.6, but well above the mark of 50 which denotes an expansion for the fifth consecutive month. Analysts had expected a decline to 57.2.
The flash PMI for the manufacturing sector improved slightly this month, to 54.7 from April’s final reading of 54.6, above the 54.0 forecast by analysts in a Reuters poll. .
It also helped the flash composite PMI, which tracks the manufacturing and services sectors which together make up more than two-thirds of Germany’s economy, beat the 54.0 expected by analysts, rising to 54.6 from 54.3. in April.
Phil Smith, associate director of economics at S&P Global, said the survey suggested manufacturers were running through order books to support production after new orders fell at the fastest rate since June 2020, the news export orders being particularly affected.
The nearly 800 companies surveyed said uncertainty among customers, severe pricing pressures, supply disruptions and COVID-related lockdowns in China had weighed on demand for goods.
“A post-lockdown recovery in services activity continues to provide a strong tailwind to the German economy,” he said.
“However, producers of goods are increasingly turning to backlogs to support production as new orders show a sustained decline, which does not bode well for growth prospects in the sector if demand for goods continues to weaken. falter,” Smith added.
(Reporting by Miranda Murray; Editing by Catherine Evans)
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