Germany's June Composite PMI Falls to 48.0, an 18-Month Low, as Services Sector Hits 43-Month Low
Claire Weston
Germany's June composite PMI dropped to 48.0 — an 18-month low and a third straight month below the 50 boom-bust line — while services plunged to 46.8, a 43-month trough, sharply raising the risk of a second-quarter contraction.
How bad are these numbers?
June composite PMI fell from 48.8 to 48.0, an 18-month low and well below the Reuters consensus of 49.6.
This is the third consecutive month below 50, with each month's drop deeper than the last. This means → Germany's private sector is not just soft — the contraction is accelerating.
In plain terms = the PMI (Purchasing Managers' Index — a survey asking firms "is business better or worse than last month?") uses 50 as the dividing line; 48.0 means most firms answered "worse."
Why is services the biggest drag?
Services PMI plunged from 48.1 to 46.8, the lowest since November 2022 — a 43-month trough.
S&P Global's associate director of economics Phil Smith noted that both business activity and new orders declined at a faster pace in June.
This reflects a shift: the weak link in Germany's economy is no longer manufacturing — services are now the main force pulling growth down.
Is manufacturing in better shape?
Manufacturing PMI edged down from 50.1 to 50.0, barely clinging to the boom-bust line — effectively stagnant.
New orders fell for a fourth straight month, with the steepest drop since December 2024.
In plain terms = manufacturing hasn't broken below 50, but it's running on fumes — shrinking new orders mean more downside pressure ahead.
Is there any good news at all?
Input-cost inflation fell to a four-month low; output-price gains narrowed to a three-month low.
This means → pricing pressure on the corporate side is easing at the margin, opening a sliver of room for future rate cuts.
Yet firms' 12-month business outlook weakened slightly and remains below its long-run trend — confidence has not recovered despite the inflation relief.
What comes next?
Three consecutive sub-50 readings with each one lower raise the probability of a second-quarter GDP contraction significantly.
In plain terms = if Q2 GDP comes in negative and Q1 was also negative, Germany enters a "technical recession" (two straight quarters of negative GDP growth).
Whether services can stabilize in Q3 is the key signpost for judging if Germany can avoid that outcome.
Content is for reference only, not financial advice.