Private Sector Activity Declines

The preliminary report from S&P Global and Hamburg Commercial Bank (HCOB) reveals a concerning downturn in Germany's private sector activity for March. The Composite PMI Output Index fell to 49.7, down from 51.3, signaling a four-month low and entering contraction territory.

Services and Manufacturing Sectors Under Pressure

The Services PMI Business Activity Index experienced a sharper decline, dropping to 48.8, its lowest in 14 months. Meanwhile, the Manufacturing PMI Output Index showed slight resilience at 51.6, albeit down from 52.1 the previous month. The Manufacturing PMI itself was recorded at 48, a minor decrease from March's 48.3.

Expert Insights on Germany's Economic Challenges

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, highlighted the serious challenges facing Germany's export-driven growth model. Despite manufacturers demonstrating resilience with a second month of rising output and a rare increase in export orders, optimism among service firms has sharply declined, reaching its lowest since September 2023.