In a surprising turn of events, Germany’s private sector defied expectations by returning to expansion in April, buoyed by a notable uptick in service sector activity.
Preliminary findings from the Purchasing Managers’ Index (PMI), which amalgamates data from Germany’s services and primary manufacturing sectors, compiled by Hamburg Commercial Bank (HCOB) in collaboration with S&P Global, revealed a significant rise. The index surged to 50.5 in April from 47.7 in March, surpassing expectations of 48.5 and marking a pivotal turnaround as it crossed the crucial threshold of 50 for the first time in 10 months.
An index reading above 50 signifies expansion in business activity, while a reading below 50 indicates contraction.
Cyrus de la Rubia, Chief Economist at HCOB, commented on the optimistic outlook, stating, “Based on the GDP Nowcast PMI figures, we estimate that German GDP may grow by 0.2% in 2Q24 after expanding by 0.1% in the first quarter.”
The Services PMI surged to 53.3 in April from 50.1 in March, reaching its highest level in 10 months and surpassing expectations of 50.5.
Conversely, the PMI index for the primary manufacturing sector also exhibited growth, rising to 42.2 in April from 41.9 in March, albeit falling slightly short of the forecasted 42.8.
The unexpected resurgence in both manufacturing and service sectors signals a potential economic rebound for Germany, offering a glimmer of hope amid previous concerns of stagnation.