23.08.201610:08:00UTC+00Significant Weakness Seen in German Services Sector in August, While Manufacturers Remain Resilient

Data released earlier on Tuesday by IHS Markit showed German flash PMI manufacturing index declined slightly to a three-month low of 53.6 from 53.8 in the previous month. The services-sector index weakened more significantly to a 15-month low of 53.3 from 54.4 previously. German services PMI missed forecasts for an unchanged reading of 54.4.

The decline in service sector PMI was surprising as latest survey evidence suggested that service providers would have gained robust support from aggressive ECB monetary policy, while manufacturers would expected to have seen a greater negative impact from global uncertainty and the UK referendum result.

The overall composite output index declined to a two-month low of 54.4 from 55.3 previously. The manufacturing export orders component was notably buoyant at the highest level for 30 months, which will underpin output expectations. There was an increase in order backlogs for the third successive month.

Employment saw further gains during the month, remained above the long-term average. Input costs increased for the fourth successive month while output costs rose to a nine-month high.

"Today's survey results highlight that the German economy is continuing its uninterrupted upward trend in August," Markit Economist Oliver Kolodseike said.