German Services PMI Rises to a 10-Month High 53.3 in April

Bob Mason
Published: Apr 23, 2024, 07:51 GMT+00:00

Key Points:

  • German Services PMI surged from 50.1 to 53.3 in April, while the manufacturing sector continued to struggle.
  • Wage growth drove input prices higher, testing investor bets on a June ECB interest rate cut.
  • Up next are preliminary private sector PMIs for the Eurozone and the US.
German Services PMI

In this article:

On Tuesday, April 23, the German economy was in the spotlight. Preliminary private sector PMIs for April drew investor interest amidst rising bets on a June ECB rate cut.

German Private Sector PMIs and the ECB

In April, the German HCOB Services PMI increased from 50.1 to a 10-month high of 53.3. Moreover, the German HCOB Manufacturing PMI rose from 41.9 to 42.2. Economists forecast PMIs of 50.6 and 42.8, respectively.

As a result, the German HCOB Composite PMI advanced from 47.7 to a 10-month high of 50.5 versus a forecasted 48.6.

The Services PMI had more impact, accounting for over 70% of the German economy.

According to the preliminary survey,

  • New business across the services sector increased for the first time in ten months.
  • Workforce numbers increased at a more marked pace across the services sector.
  • Wage increases drove operating expenses higher across the services sector.
  • Output prices were also higher for the services sector as firms passed on increasing costs to their customers.
  • Optimism across the services sector pulled back from a 25-month high in March.

ECB Monetary Policy: Impact Analysis

The HCOB Services PMI will likely impact the ECB interest rate trajectory more. The ECB remains focused on the services sector, the main contributor to inflation. Employment and price trends for April could test investor bets on a June ECB interest rate cut. The survey singled out wage growth as a driving force behind input cost pressures.

EUR/USD Reaction to German Private Sector PMIs

Before the preliminary private sector PMI numbers from Germany, the EUR/USD fell to a low of $1.06385 before rising to a high of $1.06682.

In response to the German private sector PMI, the EUR/USD surged from $1.06650 to a session high of $1.06949.

On Tuesday, April 23, the EUR/USD was up 0.28% to $1.06832.

A graph with a line graph Description automatically generated with medium confidence

Up Next

Later this morning, preliminary private sector PMIs for the Eurozone will also warrant investor attention. Service sector activity, input and output price trends, and job creation rates will be likely focal points. Economists forecast the HCOB Services PMI to increase from 51.5 to 51.8 and the HCOB Manufacturing PMI to rise from 46.1 to 46.5 in April.

From the US, private sector PMIs will also need consideration. Economists expect the S&P Global Services PMI to increase from 51.7 to 52.0. Moreover, economists predict the S&P Global Manufacturing PMI to rise from 51.9 to 52.0.

Once more, the focus will likely be on the services sector, accounting for over 70% of the US economy. The services sector is a focal point for the Fed, with housing services an area of concern vis-à-vis returning inflation to the 2% target.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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