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Germany PMI May 2024

Germany: Services PMI rises to a one-year high in May

The HCOB Germany Services Purchasing Managers’ Index (PMI) rose to a one-year high of 54.2 in May from April’s 53.2. As a result, the index moved further above the 50.0 no-change threshold and signaled a faster improvement in services-sector business activity compared to the previous month.

Stronger underlying demand underpinned May’s upturn. Service providers reported a faster expansion in new business and the first, albeit marginal, increase in new business from abroad in a year. As a result, firms expanded workforces at the quickest pace since June 2023 and reduced backlogs of work.

On the topic of prices, inflationary pressures eased in May, with both input costs and output prices increasing at the weakest rate in three years, although they still remained above the long-run averages. Lastly, business sentiment improved, with optimism reaching its highest level since February 2022, supported by expectations of increased demand for investments and a growing willingness to spend among customers.

Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, commented:

“Things are looking up. The mood in the German service sector is improving month by month. There’s growing hope that the German economy is not the sick man of Europe after all. In fact, Germany is no longer lagging behind other countries and has passed this baton to France, where the service sector has slipped back into recession. Meanwhile, Germany’s service sector has caught up with Italy’s and almost also to Spain’s, whose business activities have been rising since the beginning of the year and last autumn, respectively. A well-performing tourism sector likely plays a crucial role in this upswing.”

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