Germany January flash manufacturing PMI 44.1 vs 42.7 expected | Forexlive

• Manufacturing PMI 44.1 vs 42.7 expected and 42.5 prior.
• Services PMI 52.5 vs 51.0 expected and 51.2 prior.
• Composite PMI 50.1 vs 48.2 expected and 48.0 prior.

Key findings:

• HCOB Flash Germany Composite PMI Output Index(1) at 50.1 (Dec: 48.0). 7-month high.
• HCOB Flash Germany Services PMI Business Activity Index(2) at 52.5 (Dec: 51.2). 6-month high.
• HCOB Flash Germany Manufacturing PMI Output Index(4) at 45.2 (Dec: 41.7). 8-month high.
• HCOB Flash Germany Manufacturing PMI(3) at 44.1 (Dec: 42.5). 8-month high

Comment:

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

“Is this the unexpected Trump effect? It looks as if companies see good reasons to put pessimism aside. Companies in the
services sector have increased their activity for the second month in row after a short-term blip in November. Manufacturing
output is shrinking at the slowest rate since mid-2024, and the new order situation has eased a bit too. This shift towards
optimism is highlighted by a much better outlook on future activity, which goes hand in hand with the German DAX index
outperforming the US-based S&P 500 in January.”

“This is great news for the services sector. Not only has activity picked up pace, but services companies have also stopped
trimming their staff and actually increased employment for the first time since June last year. This aligns with the more
positive outlook on future activity.”

“The PMI offers some hope that Germany might dig itself out of the recessionary phase of the past two years. The headline
composite PMI has crossed the 50 threshold for the first time since early summer last year, thanks to a stronger services
sector and an easing recession in manufacturing. The latter’s performance will not only hinge on US actions regarding tariffs
but also on the plans and measures of the new German government after the general elections in February.”

“On the price front, there’s no relief in the services sector. Input price increases have accelerated, likely due to the higher
CO2 tax that kicked in on January 1st, affecting sectors like transport and hospitality. The good news is that seemingly
services companies are strong enough to pass at least part of these price increases onto their clients.”