German services stagnate in April due to coronavirus restrictions -PMI
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Restrictions to contain a third wave of coronavirus infections halted a recovery in Germany’s services sector in April, a survey showed on Wednesday, as Europe’s largest economy struggles to leave the COVID-19 crisis behind.
IHS Markit’s final services Purchasing Managers’ Index (PMI) fell to 49.9 from 51.5 in March, indicating a broad stagnation in services activity. The reading was below a flash estimate of 50.1.
Expectations of future activity also softened, but companies surveyed continued to hire more staff, which IHS Markit partly attributed to positive spillover effects from the more export-oriented manufacturing sector. A sister survey this week for manufacturing stayed close to March’s record high.
“The continued strong performance seen in manufacturing is spilling over to services, notably supporting a rise in activity for transport and storage businesses,” IHS Markit economist Phil Smith said.
“Moreover, both the manufacturing and services surveys show that hiring is picking up, which will help the recovery once restrictions can start to be loosened again.”
The final composite PMI, which tracks activity in both the services and manufacturing sectors, remained in growth territory but fell to 55.8 from its 37-month high of 57.3 reached in March, reflecting a slower expansion in goods production. The reading was just below the flash estimate of 56.0.
The survey also revealed a continued rise in cost pressures across the services sector, albeit not at the same pace as seen in manufacturing where supply bottlenecks with semiconductors even led to production problems.
The German economy contracted by a greater than expected 1.7% in the first quarter as the COVID-19 lockdown measures stifled private consumption and the chip shortages held back output in the automobile industry.
