OUR Germany still growing economically, but not thanks to industries her. Contrary to expectations, Europe’s largest economy avoided recession and continues to grow development, but the growth driver is the service sector. At the same time, activity in its industries is declining. The numbers released yesterday tend to contradict, at least in part, the results of a survey by the Association of German Chambers of Industry (DIHK) released a day earlier, which predicted zero growth this year as businesses “do not see” growth prospects.

However, May was the fourth consecutive month of growth for the German economy, with its GDP growth rate reaching its highest level in recent months, according to related research by S&P Global. Growth was driven entirely by faster growth in the service sector and, as Cyrus de la Rubia, Chief Economist at the Hamburg Commercial Bank, points out, “The good health of the service sector suggests that consumer spending is at a better-than-expected level, despite inflation lowered the purchasing power of German households.” He explains that the manufacturing sector is in decline due to the downturn in this sector in China, a downturn that began in the second quarter of the year.

News that Germany’s economy is growing is especially encouraging, though, as Europe’s largest economy has been flirting with recession for months now due to a sudden, almost violent shutdown by the Russians. hydrocarbons. The sharp drop in energy supply and the various energy saving strategies used by German industry led to a reduction in production in the last three months of last year. As for the latest data, which is expected tomorrow on Thursday, and regarding the first quarter of this year, then, according to the first estimates, they will show stagnation in industrial production. A survey conducted by S&P Global among German companies shows that purchasing managers expect a gradual increase in economic activity.

The fact that the manufacturing sector has been slowing down for an extended period raises concerns about the duration of the recovery.

But the fact that the manufacturing sector has been slowing down for a long period of time raises fears and doubts about the duration of the recovery. General sentiment in the manufacturing sector is negative for the first time in five months, while optimism prevails in the service sector.

At the same time, after all, developments on the price front also reflect the different course taken by two vital sectors of the German economy. In the consumer goods sector, inflationary pressures have begun to ease, while they are picking up in the services sector. As Cyrus de la Rubia points out, these developments raise the suspicion that “service companies have succeeded, on average, in increasing profit margins and thus keeping inflation high.”

However, as regards the crisis in the manufacturing industry, the picture is the same everywhere. Eurozone. The latest data released yesterday shows that activity in this sector is declining at the fastest pace since the first wave of the pandemic, which forced European businesses to close, threatening the entire economy. The Eurozone Responsible Supply Index fell to 44.6 in May, well below the 50 that separates growth from contraction.

The corresponding service sector index also declined, but remains at high levels, namely at the level of 55.9 points, demonstrating healthy growth. The data, however, raises serious questions about the rate of growth in the Eurozone and casts doubt on whether it can achieve the 0.4% quarterly growth projected by the Commission last week for this year. As for the second economy of the eurozone, France, it recorded in May the lowest growth rate in the last four months.

The Responsible Supply Index fell to 51.4 from 52.4 in April and below the average economists’ forecast of 52. Thus, it showed that economic activity in French companies that report falling demand is slowing down, and business confidence has fallen to its lowest levels over the past five months.