German economic recovery loses momentum in Sept - flash PMIs

BERLIN (Reuters) - Germany's economic recovery from the COVID-19 pandemic lost momentum in September as activity in both the manufacturing and services sectors slowed amid supply bottlenecks and waning catch-up effects, a survey showed on Thursday.

IHS Markit's flash Purchasing Managers' Index (PMI) showed growth in the manufacturing sector slowed to an eight-month low reading of 58.5 from 62.6 in August. The subindex for the services sector slipped to a four-month low of 56.0 from 60.8 in August.

As a result, the flash composite PMI, which tracks the manufacturing and services sectors that together account for more than two-thirds of the German economy, dropped to a seven-month low of 55.3 from 60.0 in August.

IHS Markit analyst Phil Smith said the survey data suggested that business activity was beginning to level off after rebounding sharply over the summer months.

"However, despite the slowdown in September, the pace of economic growth in the third quarter still looks to have surpassed the 1.6% expansion seen in the three months to June," Smith added.

While companies remained upbeat about their business outlook on hopes that the pandemic could be overcome soon, growth expectations were still held back by supply chain concerns and risks posed to demand from rising prices, Smith said.

The Ifo institute on Wednesday cut its 2021 growth forecast for Europe's largest economy to 2.5%, pointing to supply chain disruptions and a scarcity of intermediate goods which combined are slowing down production in the industrial sector.

(Reporting by Michael Nienaber, Editing by Hugh Lawson)