Germany/PMI: Private sector activity returned to growth in April

by Maria Martinez

BERLIN, April 23 (Reuters) – A surge in service sector activity helped Germany’s private sector unexpectedly return to growth in April, according to the HCOB/S&P Global Purchasing Managers Survey published Tuesday.

The “flash” composite PMI rose from 47.7 in March to 50.5 this month, compared to a consensus of 48.5. This is the first reading of the index above the 50 mark, which separates contraction from growth, in 10 months.

“Taking into account the PMI figures in our forecasts, we estimate that GDP could increase by 0.2% in the second quarter, after growth estimated at 0.1% in the first quarter,” explains Cyrus de la Rubia, economist in head at the Hamburg Commercial Bank.

The services PMI rose from 50.1 in March to 53.3 this month, also its highest level in 10 months, compared to a consensus of 50.5.

“The services sector can serve as a catalyst for the economy as a whole,” notes Cyrus de la Rubia.

Although the manufacturing sector remains in contraction, the pace at which industrial production declines has slowed, while manufacturing confidence has reached its highest level in a year.

The manufacturing PMI rose to 42.2 in April from 41.9 the previous month, below a Reuters poll’s forecast of 42.8.

The survey shows a slight increase in price pressures at the start of the second quarter. Input and producer price inflation rates increased, but remained broadly in line with their long-term averages. (Report by Maria Martinez, French version Corentin Chappron, edited by Blandine Hénault)