FX.co ★ German Private Sector Growth Slows

Germany’s flash composite PMI slipped to 51.0 in August 2026 from 51.3 in July, coming in below expectations of 51.3 and marking a two-month low. Growth was driven by a strong rebound in manufacturing, where output rose at its fastest pace in more than four and a half years, with the index climbing to 56.7. New orders and export sales also rose sharply, boosted by stockbuilding, higher defence spending and increased investment in data centres.

By contrast, the services sector remained subdued, posting its fifth consecutive monthly decline, although the downturn was relatively mild. The labour market showed tentative signs of stabilisation: overall employment was broadly unchanged after more than two years of declines, as slower job losses in manufacturing offset a modest increase in hiring in services.

Business confidence improved, reaching its highest level since before the outbreak of the Middle East conflict. At the same time, input cost pressures eased slightly, and selling price inflation slowed to a five-month low.