According to the report from IHS Markit, business activity continued to fall across Germany’s private sector in May, albeit with the rate of decline easing from the record pace seen in April. Meanwhile, despite being less pessimistic about the outlook, firms continued with further steep job cuts and discounting of prices charged for goods and services.

The headline Flash Germany Composite PMI Output Index recorded a reading of 31.4 in May, up sharply from April’s record low of 17.4 but still the second-lowest figure since comparable data were first compiled in 1998. Underlying data showed similarly steep falls in manufacturing production and services business activity, though in both cases the rates of contraction were discernibly slower than in April amid the reopening of parts of the economy. In the majority of cases lower activity was attributed to restrictions on business operating capacity and reduced demand, linked in turn to the coronavirus disease 2019 (COVID-19) outbreak. Indeed, firms across both monitored sectors reported sustained (albeit much slower) downturns in inflows of new business in May, with export sales showing particular weakness. 

The easing of lockdown restrictions and growing hopes of a recovery in domestic and international demand saw the survey’s measure of future output improve further from March’s series record low. That said, business sentiment remained firmly in negative territory and lower than at any point prior to March (since this particular series began in July 2012). Manufacturers remained more downbeat about the longer-term outlook than their service sector counterparts.