Germany’s Private Sector Slips Back Into Contraction
The S&P Global Flash Germany Composite Purchasing Managers’ Index (PMI) Output Index declined to 48.3 in April, down from 51.9 in March. This marked the first time since May 2025 that the index fell below the 50-point line, which separates growth from contraction. Economists had anticipated a reading of 51.1, making the drop a notable downside surprise.
The overall deterioration was largely attributed to the services industry, where the activity index fell sharply to 46.9 from 50.9. This represents its lowest level in 41 months, signaling a pronounced weakening in the sector.
In contrast, manufacturing continued to expand, though at a slower pace. The manufacturing PMI eased to 51.2 from 52.2, while the output component slipped to 51.7 from 54.0, indicating a moderation in industrial momentum rather than a reversal into contraction.
According to S&P Global, the broader softening in business conditions was linked to the spillover effects of the Middle East conflict, which weighed on demand, business sentiment, and price pressures across the economy.
The survey further indicated that new orders fell at their fastest rate since December 2024. At the same time, business confidence dropped to its weakest level since September 2024 and turned negative for only the second time in more than two and a half years, highlighting growing uncertainty among firms.
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