Germany’s private sector activity unexpectedly slipped into contraction in April, as a sharp downturn in the services sector outweighed continued but slowing growth in manufacturing, according to preliminary survey data.
The S&P Global Flash Germany Composite Purchasing Managers’ Index (PMI) fell to 48.3 in April from 51.9 in March, dropping below the 50-point mark that separates expansion from contraction for the first time since May 2025. Analysts had forecast a reading of 51.1.
The decline was largely driven by services, where activity dropped sharply to 46.9 from 50.9, marking a 41-month low for the sector.
Manufacturing remained in expansion territory but showed signs of weakening. The sector’s PMI eased to 51.2 from 52.2, while output growth slowed to 51.7 from 54.0.
S&P Global reported that overall activity weakened as the impact of geopolitical tensions in the Middle East fed through into weaker demand, lower business confidence and rising cost pressures.
New orders fell at their fastest pace since late 2024, while business confidence declined to its lowest level since September of that year, turning negative for only the second time in more than two years.
Economists noted that sentiment among businesses has deteriorated significantly since the escalation of the conflict, with concerns growing over energy costs and economic stability.
Firms responded to rising input costs by increasing selling prices at the fastest rate in more than three years, adding to inflationary pressures across the economy.
Analysts said PMI data is closely monitored as an early indicator of economic performance, often providing insight into broader growth trends ahead of official figures.
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