Germany March final services PMI 50.9 vs 50.2 prelim

• Final Services PMI 50.9 vs. 50.2 expected
• Prior 51.1 prior.
• Final Composite PMI 51.3 vs. 50.9 expected
• Prior 50.4

Key findings:

• Germany Services PMI Business Activity Index at 4-month low.
• Germany Composite PMI Output Index at 10-month high.
• Rates of input cost and output price inflation ease to five-month lows

Comment:

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

“The service sector seems to be losing momentum, though it was not exactly racing ahead before. Still, the near-stagnation
that can now be observed in business activity should not be over-interpreted. Over the past couple of years, there have been
several short phases where service providers dialled things back, only to bounce back into growth mode a few months later.
The fact that hiring is still happening and confidence in future business activity has even ticked up suggests we are not
looking at a long-term slump.

“Cost increases in the service sector have slowed down quite a bit. Lower fuel prices – especially important for
transportation services – might have helped here. Plus, wages are not rising as much now that inflation has already been
accounted for in recent years. This easing of cost inflation is also showing up in selling prices, which are climbing at a slower
pace. It seems that some service providers are now more open to offering discounts, given the relatively weak demand.

“As for the debt brake reform and the special infrastructure reform, they are pretty much a non-event for the service sector,
leaving no noticeable impact in the PMI survey aside from a slight uptick in business expectations. But it is worth noting that
the lower and upper houses only voted on the constitutional changes toward the end of the survey period, and there was
some uncertainty about whether they would get the necessary support. On a broader level, many service providers probably
are not expecting a direct boost from the package, since the new funds are mainly earmarked for defence and civil
engineering.

“However, it can be safely assumed that service providers who are involved in planning processes, for example,
and who benefit from the usual multipliers – after all, the income created will be spent again – will also profit from the
additional spending. We are optimistic that the impact will start showing in the second half of the year and become more
pronounced in 2026.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.