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German private sector growth hits four-year low in December - PMI

German private sector growth hits four-year low in December - PMI
FILE PHOTO: The skyline with its financial district is photographed on early evening in Frankfurt, Germany, September 18, 2018. REUTERS/Kai Pfaffenbach   -   Copyright  KAI PFAFFENBACH(Reuters)
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BERLIN, Dec 14 (Reuters) – Germany’s private sector expansion slowed to a four-year low in December, a survey showed on Friday, suggesting growth in Europe’s largest economy may be weak in the final quarter.

IHS Markit’s flash composite Purchasing Managers’ Index (PMI), which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, fell to 52.2 from 52.3 in the previous month.

The index has dropped eight times in 2018, including in the final four months of the year, as the economy cools due to one-off effects like car registration bottlenecks as well as more lasting headwinds from trade frictions.

Markit economist Chris Williamson said he expected the economy to grow by 0.2 percent in the final quarter after a contraction in the July-September period.

He said that while the economy was not facing an immediate risk of recession, the outlook remains gloomy, especially as the possibility of Britain leaving the European Union next year without an agreement on future relations lurks on the horizon.

“The risk of a recession has increased, but we still don’t see this happening in our projections,” said Williamson.

Bottlenecks in new car registrations due to the introduction of stricter pollution standards, and a drought that caused disruptions to ferried deliveries of fuel and other raw materials have weighed on the German economy.

Clearing the vehicle registration bottlenecks and getting traffic on major waterways back to normal would provide a much-needed impetus for the economy, Williamson said.

(Reporting by Joseph Nasr; Editing by Hugh Lawson)

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