Germany April flash manufacturing PMI 48.0 vs 47.6 expected

• Manufacturing PMI 48.0 vs 47.6 expected and 48.3 prior
• Services PMI 48.8 vs 50.2 expected and 50.9 prior
• Composite PMI 49.7 vs 50.4 expected and 51.3 prior

Key findings:

• HCOB Flash Germany Composite PMI Output Index 4-month low.
• HCOB Flash Germany Services PMI Business Activity Index 14-month low.
• HCOB Flash Germany Manufacturing PMI Output Index 2-month low.
• HCOB Flash Germany Manufacturing PMI 2-month low.

Comment:

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

“You could say Germany’s export-driven growth model is facing some serious challenges, but the US tariff policy has not
caused a major slump in manufacturing just yet. In fact, manufacturers have managed to increase production for the second
month in a row and even saw a slight uptick in export orders, something we have not seen since early 2022. This is pretty
impressive and might be due to hopes of reaching some compromises with the US, along with Germany’s well-diversified
export destinations – 90% of exports go to countries other than the US. Of course, there is still a lot of uncertainty, and
optimism about future output has taken a bit of a hit.

“Profit margins for manufacturers could improve. Input prices have dropped significantly thanks in part to lower energy costs,
and companies have been able to raise their selling prices a bit for the first time since May 2023. This could be a sign of
resilience, possibly because many manufacturing companies are producing dual-use goods or can switch to making military-
use products. With the new government likely to ramp up defence spending, many companies are starting to think along
these lines.

“Things are not going smoothly for service providers. Activity is down, and optimism about future business has taken a hit.
Still, the continued growth in employment and some signs of stabilization in new business show that companies are far from
throwing in the towel. With the expected expansionary fiscal policy, service providers should be able to benefit from this
development.

“Costs in the service sector have risen faster than in the previous month, dashing hopes that wage increases are slowing
and feeding less into input costs. Combined with slower inflation of selling prices, this means profit margins in the services
sector are taking a hit.”