Germany’s private sector saw unexpected growth in April, with a rise in activity in the service sector driving the expansion, according to a preliminary survey released on Tuesday. The HCOB German Flash Composite Purchasing Managers’ Index (PMI) rose to 50.5 this month from 47.7 in March, surpassing expectations and marking the first reading above 50 in 10 months. This index tracks the services and manufacturing sectors, which make up a significant portion of the German economy.
Economists are optimistic about the country’s economic outlook, with estimates suggesting a potential expansion of 0.2% in the second quarter following a 0.1% growth in the first quarter. The service sector saw a significant increase, with its index rising to 53.3 from 50.1 in March, the highest level in 10 months. Hamburg Commercial Bank’s chief economist, Cyrus de la Rubia, highlighted the service sector’s potential to drive overall economic growth.
While manufacturing still showed signs of contraction, the rate of decline in factory production slowed, and confidence among goods producers reached its highest level in a year. The manufacturing PMI index rose to 42.2 from 41.9 in the previous month, although it fell slightly below expectations. Despite some positive indicators, price pressures saw a slight increase at the beginning of the second quarter, with both input costs and output price inflation ticking up but remaining in line with their long-run averages.