Germany Services PMI falls in April, indicates slower growth in service sector output

The results of the recent business survey hinted that the business activity’s growth rate in Germany slowed slightly at the beginning of Q2, noted Markit. Furthermore, firms in the country have become more wary regarding hiring policies as work-in-hand levels declined for the first time since July 2015. On the other hand, new order intakes rose further, while businesses recorded present optimism towards their 12-month outlook for activity, noted Markit.

Service providers in Germany recorded a further noticeable increase in business activity last month. However, the seasonally adjusted final Markit Germany Services Business Activity Index dropped in April to 54.5 from March’s 55.1. The drop signals at a slower growth in output of service sector. Total private sector output of Germany also expanded at a slower rate. The final Markit Germany Composite Output Index dropped to 53.6 in April, an 11-month low.

Furthermore, service sector employment also grew at a slower rate last month, consistent with the output trend. Certain firms have mentioned reducing staff in order to optimize costs. The job creation pace was the weakest in one year. However, employment has grown in each of the past 30 months. Meanwhile, service providers have recorded a slight rise in new order growth in April from March’s five-month low. Furthermore, all sub-sectors recorded rising new business.

Meanwhile, input costs faced by service providers in Germany increased more in the beginning of Q2. This might be due to higher staff costs, said Markit. In April, output charges also continued to rise as firms passed to their clients the higher input costs.