Germany's slump in business activity worsened in August as companies faced falling demand from a combination of high inflation, rising interest rates and economic uncertainty, Reuters reported.

S&P Global's composite purchasing managers' index (PMI), which tracks both the manufacturing and services sectors, which together make up more than two-thirds of Europe's largest economy, fell to 47.6 in August from a final July reading of 48.1.

August was the second consecutive month in which the index fell below the 50 mark, which separates growth from contraction, and the lowest reading.

Separately, the manufacturing index rose to 49.8 in August from 49.3 the previous month, beating analysts' forecasts of 48.2, while the services index fell to 48.2 from 49.7 a month earlier, falling short of expectations of a 49.0 in August.

The PMI data paint a bleak picture of the German economy in the middle of the third quarter, showing a deepening decline in private sector business activity, said Paul Smith, deputy director of economics at S&P Global Market Intelligence.

On the positive side, Smith said the data do point to further removal of supply bottlenecks and manufacturing cost inflation. However, with the threat of an energy crisis still high, the outlook remains riddled with uncertainty, he added.