In a surprising turn of events, Germany’s private sector has 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 marks 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.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, commented on the latest PMI numbers and stated that they estimate GDP may expand by 0.2% in the second quarter following an estimated 0.1% growth in the first quarter. The index for the service sector rose to 53.3 this month from 50.1 in March, its highest level in 10 months, suggesting that the service sector may serve as a catalyst for the overall economy.
While manufacturing remained in contraction, there was a slight decrease in confidence amongst goods producers compared to March, although their confidence reached its highest level in a year after rising from 42.9 to 43.1 last month. However, this was below the forecast of 42.8 in a Reuters poll and showed that factory production eased but did not return to positive territory yet. Additionally, both input cost and output price inflation ticked up slightly but remained broadly in line with their respective long-run averages at start of second quarter price pressures increased