Economy growth persists in Germany for a second successive month in July
In a positive development for the German economy, the private sector expanded for the second consecutive month in July, as indicated by the Composite Purchasing Managers' Index (PMI) of 50.3, according to data released on Tuesday. Although this figure is slightly below the previous month's 50.4, it remains above the 50 threshold, signifying expansion.
The growth was driven by a marginal increase in the services sector, which has returned to the growth zone after ten months of contraction. The services sector PMI stood at 50.1 points in July, up from 49.7 in June, crossing the growth threshold. However, the expansion rate in the services sector can be described as marginal, according to Cyrus de la Rubia, chief economist at Hamburg Commercial Bank (HCOB).
The manufacturing sector also showed signs of stabilization, with the PMI rising to 49.2 points in July, up from 49 in June. This growth was supported by robust export demand and cost discipline, with expectations of continued improvement. Production has expanded for the fifth consecutive month in the manufacturing sector.
Despite the positive signs, the economic situation in the manufacturing sector remains fragile. Economists polled by Reuters expected the PMI to rise to 50.7 points, a figure that was not met. The services sector's PMI is also lower than the expected PMI for the private sector (50.1 compared to the expected 50.7 for the private sector).
However, there is a note of optimism in the services sector, as companies are much more optimistic about their business activity in the future. This sentiment was echoed by Cyrus de la Rubia, who stated that companies are more optimistic about their business activity in 12 months' time.
As for the economic outlook in August, further updates would be needed to determine if this trend has continued. The data for August's PMI for the private sector is not yet available.
- To address the economic expansion and promote business growth in the German community, a potential strategy could be the implementation of a community policy that supports vocational training programs, particularly in the services sector, to further stabilize and increase the expansion rate.
- In order to fund these vocational training initiatives and stimulate additional job opportunities in various industries, it may be beneficial to explore potential finance options that could support the growth of these programs, thereby strengthening the German business sector.
