According to a preliminary survey conducted by S&P Global, Germany’s private sector unexpectedly returned to growth in April. The HCOB German Flash Composite Purchasing Managers’ Index (PMI) rose to 50.5 this month from 47.7 in March, surpassing a Reuters poll forecast of 48.5. This was the first reading above the 50 mark that indicates expansion in 10 months, with the composite PMI index tracking the services and manufacturing sectors that together account for more than two-thirds of the German economy.
The service sector was a major driver of this growth, with its index rising to 53.3 this month from 50.1 in March, its highest level in 10 months. This suggests that the service sector may serve as a catalyst for the overall economy and could help drive economic growth in the second quarter.
However, manufacturing remained in contraction, although the rate of decline in factory production eased and confidence amongst goods producers reached its highest level in a year. The manufacturing PMI index rose to 42.2 from 41.9 in the previous month, although it was below the forecast of 42.8 in a Reuters poll. Despite this, there were slight increases in price pressures at the start of the second quarter, with both input cost and output price inflation ticking up but remaining broadly in line with their respective long-run averages.
