March 05, 2025 at 08:55AM
Prior 52.5
Composite PMI 50.4 vs 51.0 prelim
Prior 50.5
Despite a slight pick up in the manufacturing sector last month, Germany’s services sector turned out to be the disappointment. And with the negative revision here, overall business activity fell a little but still posted marginal growth in February. Overall, it points to an economy that is still very much lacking in any positive momentum. HCOB notes that:
“Services activity growth slowed down since the start of the year, and more so than suggested by the flash HCOB PMI
estimate. There’s still mild growth, but the counterweight to the recession in manufacturing is less pronounced, putting the
economy in a weaker spot. Looking at the composite PMI, the message is clear: the economy is struggling to get into a
growth mode. This means that Germany isn’t just suffering from a lack of external demand, which is the main factor for the
manufacturing sector, but also from a lack of internal demand, which drives services. This poses a challenge for the
incoming new government as it will not be enough to only improve competitiveness, but there’s also a need to stimulate
private consumption.
“Services companies managed to increase prices at a similar rate to the previous month, while cost inflation, driven mainly
by higher wages, has softened a bit from a rather high level. On a positive note, new business barely declined, which might
be the reason companies are still creating jobs, even if the hiring rate has decreased. Overall, the service sector remains the
stabilizer of the whole economy, and there are no clear signs that this will change anytime soon. This is especially true as
services are less vulnerable to US trade policies than manufacturing.
“Some companies reported being hopeful that the economy might turn around when a new, more stable government is
formed. However, overall optimism about growth prospects is below the long-term average and has declined, which goes
hand in hand with a decrease in outstanding business. The PMI doesn’t give the impression of being on the brink of dynamic
growth, nor does it suggest we’re heading for a cliff edge.”
This article was written by Justin Low at www.forexlive.com.
