Germany February flash manufacturing PMI 46.1 vs 45.5 expected

• Manufacturing PMI 46.1 vs 45.5 expected vs. 45.0 prior
• Services PMI 52.2 vs 52.5 expected vs. 52.5 prior
• Composite PMI 51.0 vs 50.8 expected and 50.5 prior

Key findings:

• HCOB Flash Germany Composite PMI Output Index(1) at 51.0 (Jan: 50.5). 9-month high.
• HCOB Flash Germany Services PMI Business Activity Index(2) at 52.2 (Jan: 52.5). 2-month low.
• HCOB Flash Germany Manufacturing PMI Output Index(4) at 48.5 (Jan: 46.3). 9-month high.
• HCOB Flash Germany Manufacturing PMI(3) at 46.1 (Jan: 45.0). 24-month high.

Comment:

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

“The manufacturing sector is still struggling, but things are looking up. The recession has been easing for two months now, and the output index is getting closer to the expansionary threshold of 50. This improvement is thanks to a slowdown in the drop of new orders, including those from abroad. However, it's too soon to celebrate just yet, as the manufacturing sector is most likely to face challenges from US tariffs in the coming months.

“The service sector has been growing steadily for three months. Fears that it would be dragged down by the manufacturing recession haven't come true so far. This is partly because the downturn in manufacturing has eased up a bit. Plus, services are benefiting from an increase in private consumption, which has been growing at a good pace.

“The strength of the service sector is evident in companies' ability to raise prices at a similar robust pace as before. That doesn't necessarily mean their profit margins are improving, as costs are still rising significantly due to high wage agreements and other factors. But the fact that they can maintain their pricing power is a sign of resilience.

“Overall, the economy seems to be back on a growth path, at least for the first two months of the year. According to our GDP Nowcast, which takes the PMI and other data into account, the drag on growth from manufacturing is getting smaller, and the growth in services is making up for it. Looking ahead, much of the mood will depend on the capability of the new to be elected government to signal stability and to take bold measures.”