Berlin – Germany’s private sector growth lost momentum in November, according to a preliminary Purchasing Managers’ Index (PMI) survey released on Friday, with the manufacturing sector contracting and the services sector expanding at a slower pace than expected. The data highlights a mixed picture for Europe’s largest economy as it heads into the fourth quarter.

The HCOB preliminary German flash composite PMI, compiled by S&P Global, fell to 52.1 in November, down from October’s 53.9, marking a two-month low. This was the sixth consecutive month that the composite index remained above the 50-point threshold, indicating modest growth. The index combines both manufacturing and services sectors, which together account for over two-thirds of Germany’s economy.

Manufacturing Sector Falls into Contraction

The manufacturing PMI dropped further into contraction territory at 48.4, down from 49.6 in October and below analysts’ expectations of 49.8. New orders, particularly export orders, declined sharply, recording the fastest drop since January. This weakened demand contributed to falling backlogs of work and a modest rise in job losses across the manufacturing sector.

Services Sector Slows

The services PMI also slowed, falling to 52.7 from 54.6, below forecasts of 54.0. While still in growth territory, the slower pace of expansion suggests that Germany’s services sector, traditionally a major driver of the economy, is losing momentum.

“These figures are a major setback for Germany,” said Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. “The manufacturing slowdown, coupled with weaker-than-expected services growth, indicates that the German economy is limping toward marginal growth at best in the fourth quarter.”

Outlook and Economic Expectations

The German finance ministry indicated on Thursday that only a moderate economic recovery is likely by year-end. Despite the current slowdown, some manufacturers remain optimistic about future production, particularly in defense and civil engineering, benefiting from government investment programs.

Overall, the data signals caution for policymakers and investors, emphasizing the need for targeted measures to sustain growth amid continued challenges in Germany’s industrial sector.