• Manufacturing PMI 48.3 vs 47.0 expected vs. 46.5 prior
• Services PMI 50.2 vs 51.6 expected vs. 51.1 prior
• Composite PMI 50.9 vs 51.0 expected and 50.4 prior

Key findings:

• HCOB Flash Germany Composite PMI Output Index at 10-month high.
• HCOB Flash Germany Services PMI Business Activity Index at 4-month low.
• HCOB Flash Germany Manufacturing PMI Output Index at 36-month high.
• HCOB Flash Germany Manufacturing PMI at 31-month high.

Comment:

Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“What a pleasant surprise – manufacturers have ramped up production for the first time in nearly two years. This didn’t just
come out of nowhere, though. The output index has risen in five of the past six months. It might be linked to the import boom
from the US, where companies are snapping up goods from abroad to get ahead of looming tariffs. If that’s the case, we
could see a bit of a setback once those tariffs kick in. On the bright side, Germany’s massive infrastructure and defence
package, recently greenlit by both parliamentary houses, could give manufacturing a moderate boost in the near future. It’s
likely to instil some much-needed confidence in Germany as a business hub.

“Economic growth in the first quarter looks promising, with the composite PMI staying above the expansionary threshold
every month. Thanks to the fiscal package, this could mark the beginning of a more sustained recovery. Of course, there are
risks – US tariffs and a sluggish services sector, which barely grew in March, are worth keeping an eye on. But with a new
government likely to form in the coming weeks, confidence might rebound quickly. In fact, the PMI survey shows that firms in
both manufacturing and services are feeling more optimistic about future output.

“While manufacturers seem to be finding their footing, service providers are hitting the brakes. Service activity nearly
stagnated in March, and new business took a sharp dive. To make matters worse, service companies couldn’t raise selling
prices as much as they had in recent months. That said, the expansionary fiscal policy should start making waves in the
second half of the year, boosting the service sector as infrastructure and defence projects drive up demand. Most of the real
impact, though, will likely be felt in 2026.

“Employment is somewhat less under pressure in manufacturing and growing at a continued moderate pace in services.
This may be an indication that the German economy is bottoming out. It means there is a chance of a cyclical upturn and the
fiscal package more than compensating for the damage that will most likely be done by the tariff policy of the US.”