German Private Sector Activity Shrinks the Most Since 2024

The S&P Global Flash Germany Composite PMI fell to 48 in June 2026 from 48.8 in May, missing market expectations of 49.9. The reading signaled a third consecutive month of contraction in private-sector activity and the steepest decline since December 2024. The downturn was driven primarily by the services sector, where the PMI fell to 46.8 from 48.1, its lowest level in 43 months, while manufacturing output expanded at a slightly faster pace (50.8 vs 50.4). The weakness reflected subdued underlying demand, with new business inflows declining for a fourth straight month and at the fastest pace since December 2024 amid deteriorating economic conditions and heightened market uncertainty. Employment also continued to fall across the private sector. Meanwhile, inflationary pressures eased further, with both input costs and output prices rising at their slowest rates in four and three months, respectively. In addition, business expectations also weakened.

The S&P Global Germany Composite PMI was revised higher to 48.8 in May 2026 from a preliminary of 48.6 and compared to 48.4 in April, but continuing to signal a second straight month of contraction in private sector activity. The services sector continued to fall (48.1 vs 46.9) while manufacturing stalled (50.1 vs 51.4). There were broad-based decreases in new work, employment and backlogs. On the price front, input cost inflation accelerated to a 42-month high, but average charges for goods and services rose more slowly than in April. On the other hand, business expectations improved in both monitored sectors.

The S&P Global Germany Composite PMI edged up to 48.6 in May 2026 from 48.4 in April, compared to forecasts of 48.4, preliminary estimates showed. The reading pointed to a second straight month of contraction in private sector activity, amid a backdrop of weakening demand and elevated inflationary pressures. The downturn continued to be led by the service sector (47.8 vs 46.9), although there was a stalling of the manufacturing sector (49.9 vs 51.4) as factory orders fell back into decline. Input cost inflation rose to the quickest for three and-a-half years, mainly due to commodities and transportation cost, reflecting the disruption from the effective closure of the Strait of Hormuz. Meanwhile, output inflation slowed, suggesting businesses shouldering a greater proportion of the burden and hinting at an increased squeeze on company margins. Also, the pace of job losses gathered pace, despite business expectations showing a partial rebound from April's low.