German private sector shrinks for fourth month running in December - PMI

BERLIN (Reuters) - German private sector activity shrank for the fourth month running in December as a downturn in manufacturing offset services sector growth in Europe’s largest economy, a survey showed on Monday.

FILE PHOTO: Containers are seen at a terminal in the port of Hamburg, Germany November 14, 2019. REUTERS/Fabian Bimmer

IHS Markit’s flash composite Purchasing Managers’ Index (PMI), which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, was unchanged at 49.4. Analysts had forecast a rise to 49.9.

The reading was the fourth in a row below the 50 mark that separates growth from contraction.

Phil Smith, economist at IHS Markit, said “the flash data point to a weak end to a difficult year for the German economy.”

Europe’s biggest economy has been going through a soft patch as its export-oriented manufacturers struggle against a backdrop of trade friction, an ailing car industry and uncertainties over Britain’s planned departure from the European Union.

A sub-index gauging manufacturing activity slipped to 43.4, a two-month low, from 44.1 in November.

“Manufacturing continues to weigh heavily on private sector output, with faster decreases in factory production and employment in December causing the manufacturing PMI to tick down for the first time in three months,” Smith said.

“Easing rates of decline in new orders and exports continue to provide glimmers of hope, however,” he added.

A sub-index gauging services activity rose to a four-month high of 52.0, up from 51.7 in the previous month.

“The service sector remains resilient, with business activity rising at a stronger pace and business confidence perking up as well, though weak labour market trends are likely to be a restricting factor for the sector as we head into the new year,” Smith said.

Writing by Paul Carrel; Editing by Hugh Lawson