Germany June flash manufacturing PMI 49.0 vs 49.0 expected

• Prior 48.3
• Services PMI 49.4 vs 47.5 expected
• Prior 47.1
• Composite PMI 50.4 vs 49.0 expected
• Prior 48.5

Key findings:

• Germany Composite PMI Output Index at 3-month high.
• Germany Services PMI Business Activity Index at 3-month high.
• Germany Manufacturing PMI Output Index at 39-month high.
• Germany Manufacturing PMI at 34-month high.

Comment:

Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“It looks like Germany’s manufacturing sector might finally be turning a corner. For four months in a row now, production has
been ticking up. As a result, economic output in this sector grew in the first half of this year. At 49 points, the headline index
is still slightly in recessionary territory, due to factors such as further job cuts, but the trend has been upward since the
beginning of the year. It is also encouraging that order intakes have returned to growth, meaning that the momentum of
recent months cannot be attributed solely to advance orders from the US, where many companies had stocked up on goods
in anticipation of higher tariffs.

“Following the sharp slump in activity in May, the situation in the service sector is stabilizing somewhat. Business activity has
declined only slightly, and companies in this sector have increased their staffing levels somewhat more than in the previous
month. The fact that companies were able to implement greater price increases than in May also suggests that the sector is
not doing as badly as might have been expected after the previous results.

“Changes in inventories are often seen as an indicator of economic turning points. However, the accelerated reduction in
inventories should not be misinterpreted in the current context. This may be explained by the fact that some companies were
surprised by the higher demand for their goods and therefore drew more heavily on their inventories. The coming months will
show whether companies are becoming more confident about the emerging upturn – which is our expectation – or whether
they remain cautious and continue to reduce their inventories.

“There is a decent chance Germany could finally break out of the frustrating stop-start growth pattern it’s been stuck in for
the past two years – one quarter of growth followed by another of contraction. This is indicated by our nowcast, which takes
into account the rise of the Composite PMI. We are confident about the second half of the year anyway, as the new federal
government’s initial expansionary measures could then take effect.”