Mind Uncharted Explore. Discover. Learn.
German Business Activity Expands for Third Consecutive Month in April
A preliminary survey has shown that German business activity expanded for the third month in a row in April, mainly due to a revival in the services sector that more than compensated for the current manufacturing decline. The HCOB German Flash Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, soared to a 12-month high of 53.9 in April from 52.6 in March, surpassing analyst expectations of 52.7.
This is the third consecutive month that the indicator has risen above 50, which marks growth in the activity and is an encouraging sign for the German economy after seven consecutive months below the threshold. The composite index follows the services and manufacturing sectors, which together account for over two-thirds of Germany’s economy.
Services Sector Growing, Manufacturing Remains in Contraction Territory
The services sector posted growth for the fourth straight month, supported by rising demand, and saw the services PMI reading rising from 53.7 in March to 55.7 in April. However, in the manufacturing sector, the PMI fell to 44.0 in April from 44.7 in March, remaining in contraction territory for the 10th month running.
Chief Economist at Hamburg Commercial Bank, Cyrus de la Rubia, stated that firms’ ability to push through higher prices in the services sector had reduced slightly, but they still faced strong input cost increases. Meanwhile, the labour market is predicted to remain tight in Germany, which is good for both people and the broader economic perspective.
The Bottom Line
The further expansion of the German business activity in April is certainly a welcome indicator. While manufacturing has seen a decline again, the overall expansion in Germany’s services sector speaks volumes for the country’s ongoing economic stability. The future outlook for Germany’s economy is expected to remain cautiously optimistic as the country navigates both the pandemic and the challenges of changing global economics as 2023 advances.
Reporting by Maria Martinez; Editing by Hugh Lawson.
