Germany’s Economic Downturn Eases in March Amid Signs of Stabilization

In March, Germany’s economic downturn showed signs of easing, with business activity in the country’s service sector approaching stabilization, according to a preliminary survey released on Thursday.

The HCOB German Flash Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 47.4 in March from 46.3 in February. Although this marked an improvement, it fell short of the forecasted increase to 47.0 in a Reuters poll. Despite the uptick, March marked the ninth consecutive month with a reading below the 50 mark, indicating a contraction in business activity.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, noted, “Overall, Germany now teeters on the edge of a technical recession.”

The composite PMI index, which tracks the services and manufacturing sectors, showed a near-stabilization of business activity in the service sector, with the respective index rising to 49.8 from 48.3 in February, surpassing the forecast of 48.8. However, the manufacturing PMI index declined to 41.6 in March from 42.5 in February, hitting a 5-month low and falling below the Reuters poll forecast of 43.1.

Despite challenges in the manufacturing sector, overall business confidence regarding future activity steadily improved, reaching its highest level in nearly a year. However, the survey data also indicated a slight decline in employment, albeit a renewed one, highlighting ongoing uncertainties in the labor market.