BERLIN, April 7 (Reuters) - Business activity growth in Germany's service sector abruptly lost momentum in March as demand weakened amid fallout from the war in the Middle East, a survey showed on
Germany's Service Sector Growth Slows to Seven-Month Low Amid Uncertainty
Service Sector Performance and Economic Outlook
Growth Slows as Demand Weakens
BERLIN, April 7 (Reuters) - Business activity growth in Germany's service sector abruptly lost momentum in March as demand weakened amid fallout from the war in the Middle East, a survey showed on Tuesday.
The final S&P Global services PMI for Germany fell to 50.9 in March from 53.5 in February, marking its lowest reading since September and slightly below a preliminary reading of 51.2.
PMI Reading and Its Implications
A reading above 50 indicates growth while one below signals contraction.
Factors Contributing to the Slowdown
Impact of Higher Prices and Uncertainty
Phil Smith, economics associate director at S&P Global Market Intelligence, cited higher prices at the petrol pumps and heightened uncertainty as leading to the slowdown.
Challenges in Passing on Costs
Despite the sharply rising costs, however, service providers have not been able to pass on greater price increases to customers due to the weaker demand environment, he added.
Effects of Geopolitical Tensions
"Inflows of new business have fallen for the first time since last September in a clear sign of the Middle East war's immediate impact on demand, whilst a notable drop in business expectations underlines how higher energy prices, supply chain disruption and generally elevated levels of uncertainty are set to stifle growth in the year ahead," said Smith.
Business Expectations and Composite PMI
Decline in Business Expectations
Business expectations dropped to a three-month low in March, to 53.4, and slipped below the long-run average of 56.7.
Composite PMI Trends
The final S&P Global composite PMI, which includes manufacturing and services, ticked down to 51.9 in March from 53.2 the previous month, a three-month low driven entirely by the downturn in the service sector.
(Reporting by Miranda Murray; Editing by Hugh Lawson)
