Germany’s Private Sector Returns to Growth in April, Signaling Economic Rebound: PMI Index Analysis

In a surprising turn of events, Germany’s private sector returned to growth in April, according to a preliminary survey conducted by S&P Global. The HCOB German Flash Composite Purchasing Managers’ Index (PMI) rose to 50.5 this month from 47.7 in March, exceeding a Reuters poll forecast of 48.5. This marks the first reading above the 50 mark indicating expansion in ten months, with the composite PMI index tracking the services and manufacturing sectors that together account for more than two-thirds of the German economy.

The index for the service sector rose to 53.3 this month from 50.1 in March, its highest level in ten months, suggesting that the service sector may serve as a catalyst for the overall economy. Meanwhile, while manufacturing remained in contraction, the rate of decline in factory production eased and confidence amongst 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 was below the forecast of 42.8 in a Reuters poll.

According to Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, these latest PMI numbers estimate that GDP may expand by 0.2% in the second quarter following an estimated 0.1% growth in the first quarter