Germany May flash manufacturing PMI 48.8 vs 48.9 expected

• Prior 48.4
• Services PMI 47.2 vs 49.5 expected
• Prior 49.0
• Composite PMI 48.6 vs 50.4 expected
• Prior 50.1

Key findings:

• HCOB Flash Germany Composite PMI Output Index at 5-month low.
• HCOB Flash Germany Services PMI Business Activity Index at 30-month low.
• HCOB Flash Germany Manufacturing PMI Output Index at 3-month low.
• HCOB Flash Germany Manufacturing PMI at 33-month high.

Comment:

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

“These numbers paint a mixed picture – there are both positives and negatives here. On the bright side, manufacturing is
doing better, as output has been climbing for three months in a row, and new orders are following suit. In the service sector,
by contrast, activity has taken a sharper tumble. And since services make up a big chunk of the economy, that drop has
pulled overall activity into contraction. Considering the modest growth we saw in Q1, this latest data lines up with what the
German Council of Economic Experts are forecasting, namely that the economy might just be treading water this year.

“In manufacturing things are looking up. While the headline PMI is still in recessionary territory, it’s been inching higher for
five straight months. That upward trend likely reflects a mix of short-term factors – like companies rushing orders ahead of
US tariffs – and broader cyclical improvements supported by ECB rate cuts. Looking ahead, increased defence spending and
a more defined infrastructure package could give the sector an extra push. Plus, falling input costs, which are driven by
cheaper energy, should offer manufacturers some breathing room.

“Service providers are struggling a bit. Activity has been sliding for two months now, with new business drying up and pricing
power fading. Meanwhile, costs are still climbing fast, which could squeeze profit margins. On a more positive note, service
providers are still hiring, bucking the broader trend. And future expectations have ticked up a bit, though the level of
optimism is still well below the long-term average. Overall, our nowcast model, which considers the PMI among other
factors, calculates that activity of service providers will barely expand in the second quarter.”