Germany's Composite PMI Drops to 48 in June, Marking the Largest Contraction of Private Sector Activity in 2024

⑴ Germany's Composite PMI dropped from 48.8 in May to 48 in June 2026, below the market expectation of 49.9. This reading indicates that private sector activity has contracted for the third consecutive month and represents the largest decline since December 2024. ⑵ The decline was mainly dragged down by the services sector, with the Services PMI falling from 48.1 to 46.8, hitting a 43-month low. Meanwhile, manufacturing output expanded at a slightly faster pace (50.4 in May and 50.8 in June). The weakness reflects subdued underlying demand, with new business inflows declining for the fourth consecutive month, posting the largest drop since December 2024 due to deteriorating economic conditions and increased market uncertainty. ⑶ Private sector employment also continued to decline. Meanwhile, inflationary pressures eased further, with the growth rate of input costs and output prices at the slowest in four and three months, respectively. In addition, business expectations have also weakened.