- Prior 49.1
- Services PMI 53.4 vs 52.4 expected
- Prior 52.4
- Composite PMI 53.1 vs 52.3 expected
- Prior 52.1
Key Points:
- Business activity growth ticks up to four-month high in February
Comment:
Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“Hurray, German industry is growing again. For the first time in more than three-and-a-half years, the headline
manufacturing PMI is back in expansionary territory. This confirms the tentative signs of an economic turnaround that were
particularly evident in January. It is particularly encouraging that new orders have risen robustly, suggesting that production
growth will continue in the coming months. This view is supported by order backlogs, which have risen for the first time since
mid-2022, albeit only moderately. Higher new orders from abroad, which have risen again after six months of decline, have
also helped here. We expect the government’s infrastructure program and higher military spending to provide increasing
tailwinds for industry.
“The development in the service sector is encouraging. Here, business activity growth has picked up significantly, reaching
its second-highest level in almost two years. The weaker growth in new business compared to previous months may be an
indication that the pace of expansion will not remain at this level in the coming months. In fact, companies remain very
cautious in their personnel planning and have cut jobs for the second month in a row. This is consistent with the fact that
service providers were able to achieve slightly less strong price increases. Overall, however, it seems possible that the
pleasant developments in industry will spill over into the service sector in the coming months.
“In industry, companies are facing accelerating increases in purchase prices. This is likely to be partly due to higher energy
prices. Prices for crude oil and natural gas on the commodity exchanges have risen by between 12% and 14% in euro terms
since the beginning of January. At least companies were able to pass on some of these cost increases to their customers.
“GDP in Germany is likely to have grown visibly in the first quarter, unless there is a major slump in March, for which there is
no indication in the data. Companies in both the service sector and the manufacturing industry are also quite optimistic about
the next twelve months which bodes well for GDP growth of more than 1% this year, which is our expectation.”
This article was written by Giuseppe Dellamotta at investinglive.com.
