(June 23): Germany’s private sector shrank for a third month as sagging confidence over the Iran war sent services activity sinking at its fastest pace since 2022.
S&P Global’s Composite Purchasing Managers’ Index (PMIs) fell to 48 in June from 48.8 the previous month, remaining below the 50 threshold separating expansion from contraction. Analysts had expected an increase to 49.7.
Manufacturing performed better than services, dipping slightly to 50.
“The service sector continues to act as a notable drag on the economy, seeing rates of decline in both business activity and new work gather pace,” Phil Smith, associate director at S&P Global Market Intelligence, said on Tuesday in a statement. June’s results further increase the likelihood of the economy “having slipped back into contraction in the second quarter.”
Germany is facing another year of disappointing growth after the Middle East conflict erased hopes for a significant turnaround. After a strong start to 2026, the economy is now only expected to register a slight expansion. The Bundesbank predicts an advance of 0.5%, driven by government outlays on revamping infrastructure and beefing up the military.
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Costlier borrowing presents another headwind for the continent as a whole after the European Central Bank raised interest rates in June for the first time in almost three years. Despite progress between the US and Iran towards peace, markets still price one more hike in 2026.
S&P’s survey was conducted from June 11-19, capturing the first days after President Donald Trump signed his memorandum with Iran.
PMIs are closely watched by markets as they arrive early in the month and are good at revealing trends and turning points in an economy. A measure of breadth of changes in output rather than depth, business surveys can sometimes be difficult to map directly to quarterly GDP.
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Eurozone data will arrive at 10am local time.
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