The HCOB Germany Composite PMI was revised higher to 50.1 in April 2025 from an initial estimate of 49.7, although it still marked a slowdown from March’s 51.3.
Germany composite PMI revised slightly higher
The latest figure suggested that Germany’s private sector business activity was effectively stagnant, halting the modest growth momentum seen during the first quarter of the year. The reading narrowly remained in expansion territory, signaling a fragile equilibrium between marginal gains and losses across sectors.
The headline number masked divergent trends between the two main areas of the economy. The services sector, which had helped support growth in recent months, unexpectedly slipped into contraction territory, posting a reading of 49 compared to 50.9 in March. It was the sector’s first decline since late 2023, driven by weaker domestic demand and growing caution among clients amid geopolitical tensions and trade uncertainty. In manufacturing, activity remained subdued, with the PMI registering 48.4, just a tick above the prior month’s 48.3. Although still firmly in contraction, the reading hinted at tentative signs of stabilization as supply chains remained relatively steady and producers began to see hints of improvement in order books.
New business slightly declines
New business overall declined only slightly in April, registering the smallest drop in almost a year. A marginal uptick in manufacturing orders—possibly driven by pre-emptive purchasing ahead of potential trade disruptions—was accompanied by a slower decline in services-related demand. Export conditions also showed signs of bottoming out, as new export business came close to stabilizing, suggesting some resilience in external markets despite the global trade headwinds.
Labor market conditions were relatively steady, with total employment remaining broadly unchanged after ten consecutive months of decline. This pause in job losses may reflect employers' cautious optimism or a need to retain skilled labor in anticipation of a potential recovery later in the year.
Input cost pressures ease
On the inflation front, input cost pressures eased significantly, with inflation slowing to a six-month low, largely due to falling costs in the manufacturing sector. However, output prices rose at a slightly faster pace, as a renewed uptick in factory gate charges passed some of the cost burden onto customers. The services sector, in contrast, showed softer pricing power, reinforcing the uneven inflation dynamics across the economy.
Despite these mixed signals, business confidence weakened further. Expectations for future output fell to their lowest level in six months, as firms grew increasingly wary of rising geopolitical uncertainty, sluggish global growth, and the lingering threat of trade disputes—particularly between major economies such as the US and China. As such, the outlook for the German economy remains finely balanced, with downside risks mounting and any path to sustained recovery appearing tentative and gradual at best.
