German business activity suffers steepest decline since May 2020

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German business activity contracted at the fastest pace for more than three years in August, a preliminary survey showed on Wednesday.

The HCOB German Flash Composite Purchasing Managers' Index , compiled by S&P Global, fell to 44.7 from July's 48.5, hitting its lowest since May 2020 and confounding analysts' expectations for a reading of 48.3.The composite PMI index tracks the services and manufacturing sectors, which together account for more than two-thirds of Germany's economy. A deepening downturn in manufacturing output was accompanied by a renewed contraction in services activity.

Business activity in the services sector contracted for the first time in eight months. The sector reading fell to 47.3 from 52.3, marking a nine-month low. Businesses remained pessimistic about the outlook as rising interest rates, customer uncertainty and high inflation continued to weigh on demand for goods and services, the survey showed.

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