GERMAN DATA: Jul Flash PMI: 36-month High For Manufacturing PMI

The German flash July composite PMI was slightly weaker-than-expected at 50.3 (vs 50.7 cons, 50.4 prior). This was due to the manufacturing component printing at 49.2 (vs 49.5 cons, 49.0 prior), with services broadly in line at 50.1 (vs 50.0 cons, 49.7 prior). Despite remaining below the neutral 50 handle, the manufacturing PMI still reached a 36-month high, with new orders consolidating June's notable rise. 

However, the excerpts on employment and prices will still screen as dovish for the ECB, at least with respect to the near-term outlook.

Key notes from the release:

• "Service providers recorded a first uptick in inflows of new work since August last year. Reports from surveyed businesses highlighted signs of improved market conditions, an increased number of customer inquiries and positive spillovers from other parts of the economy"...."New orders in the goods-producing sector were meanwhile broadly unchanged, after having recorded the largest rise in over three years in June. Manufacturing export sales did, however, continue growing, offsetting declining intakes of new work from abroad in the service sector".
• "In line with signs of a pick-up in underlying demand, latest data showed an improvement in firms’ growth expectations for the coming year. The degree of optimism reached the highest since May 2024, buoyed by a notable increase in confidence among services firms".
• "Despite firms growing more upbeat about the outlook, they continued to trim workforce numbers during July. Furthermore, latest data marked the first broad-based reduction in employment so far this year as services firms reported a modest paring back of staffing capacity".
• "July’s flash data signalled a further easing of inflationary pressures across the German private sector"..."Alongside a sustained – albeit slightly softer – drop in manufacturing purchasing costs, which panellists linked to lower raw material prices and exchange rate factors, there was a slowdown in the rate of increase in service sector operating expenses for the fifth time in the past six months".
• "Average prices charged for goods and services likewise rose more slowly in July. Notably, service providers recorded the weakest increase in output prices for more than four years"