BERLIN (Reuters) - Growth in Germany’s services sector slowed in February to reach its lowest in three months as the coronavirus epidemic pushed down new business with China and other foreign clients, a survey showed on Wednesday.
Germany has reported nearly 200 cases of the disease, which is quickly spreading around the world.
IHS Markit’s final services Purchasing Managers’ Index (PMI)fell to 52.5 in February from 54.2 in the previous month. This was the lowest reading since November and much weaker than the flash estimate of 53.3 published last month.
The slowdown was driven by a near-stalling of new business, with the survey revealing a sharp drop in demand from abroad. The rate of job creation and expectations among service providers on future output weakened.
Phil Smith, Principal Economist at IHS Markit said the data showed a clear, immediate impact from the coronavirus outbreak on foreign client demand.
Germany’s domestic market still looked to be holding firm. “But given the spread of (the disease) to many other parts of the world including Germany, and the subsequent financial market reaction, it would seem that this domestic resilience is about to be broken,” Smith added.
China is Germany’s biggest trading partner, with car makers and other manufacturers in Europe’s largest economy highly dependent on both Chinese demand and supply chains.
Germany’s final composite PMI, which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, fell to 50.7 from 51.2 in January.
The reading was below a flash estimate and relatively close to the 50.0 mark that separates growth from contraction.
Shrinking exports held back the German economy in the fourth quarter of last year, showing it was stagnating even before the coronavirus outbreak began.
Reporting by Michael Nienaber, editing by John Stonestreet