Germany’s private sector slipped back into contraction in April, according to the latest HCOB ‘flash’ PMI survey, as tariff concerns and uncertainty weighed on business confidence and demand. Firms’ growth expectations sank to their lowest in six months and the labour market remained under pressure, albeit with employment falling only fractionally and at the slowest pace in almost a year.
Elsewhere, latest data showed a first rise in manufacturing output prices in almost two years, which in turn led to a slight uptick in the rate of inflation in average charges for goods and services. Manufacturing input prices, on the other hand, posted a sharp and accelerated decline, contrasting with still-strong cost inflation in the service sector.
The HCOB Flash Germany Composite PMI Output Index moved below the 50.0 no-change threshold for the first time in four months in April. However, at 49.7, down from 51.3 in March, it signalled only a marginal rate of contraction.
The renewed downturn was driven by the service sector, which saw business activity fall for the first time since last November and at the quickest rate since February 2024 (index at 48.8). Manufacturing production rose for the second month running, although the rate of growth was only modest and eased since March (index at 51.6).
It was a similar picture for new business, with lower intakes of new work in the service sector contrasting with slight growth in manufacturing new orders.
April saw a substantial reduction in business confidence across the eurozone’s largest economy to its lowest for six months.
The decline in German private sector employment extended to an eleventh straight month in April. There was a further broad-based reduction in backlogs of work at the start of the second quarter, in a sign of a general lack of pressure on business capacity across the German private sector.