German economic downturn deepens in Sept, outlook grim -flash PMI

BERLIN (Reuters) - The downturn in German business activity deepened in September, a preliminary survey showed on Friday, as higher energy costs hit Europe's largest economy and companies saw a drop in new business.

S&P Global's flash composite Purchasing Managers' Index (PMI), which tracks both the manufacturing and services sectors which together account for more than two-thirds of Germany's economy, fell to 45.9 in September from August's final reading of 46.9.

A Reuters poll of analysts had pointed to a reading of 46.0.

September marks the third month in a row that the reading fell below the 50 mark that separates growth from contraction, as well as the lowest figure, if confirmed in a final reading, since May 2020.

Separately, the manufacturing index fell to 48.3 from a final reading of 49.1 in August. The consensus forecast was for 48.3.

The services index dropped to 45.4 from a final reading of 47.7 in August. The consensus forecast was for 47.2.

"The German economy looks set to contract in the third quarter, and with PMI showing the downturn gathering in September and the survey's forward-looking indicators also deteriorating, the prospects for the fourth quarter are not looking good either," said Phil Smith, economics associate director at S&P Global Market Intelligence.

(Writing by Paul Carrel; Editing by Susan Fenton)