German Private Sector Growth Slows, PMI Show
German private sector growth slowed to its weakest level in three months in March, after services activity lost momentum and cost pressures rose sharply amid the conflict in the Middle East. These preliminary data indicate the impact of the war is starting to seep into demand, business confidence, and especially prices.
The Flash Germany Composite PMI—the preliminary estimate—fell to 51.9 in March from 53.2 in February, according to an S&P Global survey. This reading was slightly below the 52.0 expected by economists polled by Reuters. The 50 level is the dividing line between expansion and contraction.
“The March flash data shows the initial impact of the war in the Middle East on growth, demand, business confidence, and most notably, prices,” said Phil Smith of S&P Global Market Intelligence.
Sector-wise, services activity slowed to a seven-month low of 51.2, while the manufacturing PMI rose to 51.7, a 45-month high. Manufacturers posted a third consecutive month of new orders, the fastest pace of growth in four years.
However, some of the strengthening in manufacturing demand was described as “anticipatory.” Reports from manufacturers indicated that some companies were accelerating purchases due to concerns about supply disruptions in the coming months due to the war, thus boosting short-term orders. However, Smith added that output expectations were revised down—a signal that the surge in factory activity is unlikely to last.
Cost pressures also strengthened significantly. Private sector input price inflation surged to its highest level in more than three years. Manufacturing input costs rose at the fastest pace since October 2022, while factory-gate price inflation reached its highest level in more than three years—underscoring the risk of broader price pressures.
On the labor front, employment declined again in both sectors, although the overall pace of job losses eased to a three-month low. Meanwhile, business expectations for the year ahead fell to an 11-month low but remained in positive territory.
Source: Newsmaker.id
