German private sector keeps decelerating in October

German private sector keeps decelerating in October

In October, German private sector output kept decelerating due to the fact that business activity headed south at the weakest tempo for nearly three-and-a-half years. That’s what follows from survey data issued on Wednesday.

The closely-watched report backed fears that the euro zone's number one economy might be losing steam heading into the fourth quarter, thus driving worries as for the potential fallout from a global trade conflict.

As market research group Markit told, its Flash German Composite Output Index, gauging the combined output of both the service and manufacturing sectors, declined to 52.7 in October from September’s reading of 55.0, which is the lowest result since May 2015. Market experts had predicted an outcome of 54.8.

As a matter of fact, the flash manufacturing purchasing managers’ index headed south from September’s reading of 53.7 to 52.3, which turns out to be the lowest outcome for up to 29 months. Market experts had actually expected the index to go down to 53.5.

In addition to this, in October, the preliminary German services purchasing managers’ index headed south to a five-month minimum of 53.6, diving from the previous outcome of 55.9. What’s more, market experts had hoped it would hit 55.5.

By the way, on the index, a result above 50.0 points to industry expansion. On the contrary, if it’s below, it stands for contraction.

Additionally, commenting on the report, market experts told the soar in overall business activity turned out to be the weakest for nearly three-and-a-half years. It reflects not only a further easing of manufacturing output surge, but also a deceleration in the previously vivid service sector.

The deceleration in business activity surge was partly explained by a weaker trend in fresh orders, displaying the smallest monthly ascend since June 2015.

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Market updates on August 15

The risk sentiment remains under pressure after the comments by China about the countermeasures against the US tariffs. Thus, the AUD/USD and the USD/JPY pairs will be under our attention.

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