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German recession possible after new grim numbers

German recession possible after new grim numbers

International Economy

PMI decline in European economic leaders Germany and France. Archive photo. Photo: Jens Mayer AP/TT

Economics (TT)

The economy continues to falter in Europe's leading economic engine. The risk of recession in Germany increases after the PMI decline.

In Germany, the services sector PMI fell to 38.8 in July, from 40.6 in June. Expectations were that the index would rise to 41, according to Bloomberg forecasts.

The German services sector PMI also fell: 51 in July, compared to 54.2 last month. Here the forecast was 53.1.

This means the economy is more likely to enter a recession in the second half of the year, Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, tells Bloomberg.

Business index of the economy

The index, which is published monthly, is a measure of the economy's business cycle. An index number above 50 indicates growth, while an index number below 50 indicates decline.

In France, the manufacturing PMI rose to 44.5, compared to 46 in June. Expectations stated that the number would remain unchanged.

The French services sector PMI fell from 48 in June to 47.4 in July. It also exceeded expectations of 48.5.

Eurozone Purchasing Managers' Index (PMI) declines

The Eurozone Purchasing Managers' Index also fell. Manufacturing fell to 42.7 from 43.4 – an increase to 43.5 was expected, according to Bloomberg. The services sector fell from 52 in June to 51.1, the expected 51.6.

The Financial Times reports that the widespread contraction in the euro zone economy will increase calls for the European Central Bank to stop raising interest rates after this week.

In the UK, Purchasing Managers' Index (PMI) figures were also reported. The services sector fell to 51.5 from 53.7. The forecast was 53. Meanwhile, manufacturing fell from 46.5 to 45. Here the forecast was 46.

At 15:45 Sweden time, the July PMI will also be released in the United States.

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