German Private Sector Grows Most In 10 Months

(RTTNews) - Germany's private sector grew at the fastest pace in ten months in March amid a robust rebound in manufacturing production, flash survey results published by S&P Global revealed Monday.

The flash HCOB composite output index rose to 50.9 in March from 50.4 in February. This was the highest score since last May but it remained well below forecast of 51.2.

The improved performance in March reflected a renewed increase in manufacturing production. Meanwhile, the service sector lost momentum. The services Purchasing Managers' Index fell to 50.2 from 51.1 in the previous month. Moreover, this was weaker than economists' forecast of 52.3.

The manufacturing PMI climbed to 48.3 in March from 46.5 a month ago. The score was seen at 47.1. Nonetheless, the score below 50.0 indicates contraction.

The survey showed that manufacturing new orders rose for the first time since March 2022. Meanwhile, services firms reported the steepest fall in new business in just over a year.

There was a broad based reduction in backlogs of work. Further, workforce numbers decreased at a slower pace in March, reflecting a slowdown in the pace of job shedding in manufacturing. Services employment increased again in March.

Turning to prices, the survey showed a cooling in inflationary pressures. Firms reported the slowest growth in input costs and prices charged in five months.

Sentiment towards future activity improved slightly. Growth expectations increased in both monitored sectors and remained stronger in manufacturing than in services.

"Economic growth in the first quarter looks promising, with the composite PMI staying above the expansionary threshold every month," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia, said.

"Thanks to the fiscal package, this could mark the beginning of a more sustained recovery," the economist noted.

However, de la Rubia said there are risks like US tariffs and a sluggish services sector, which barely grew in March, are worth keeping an eye on.