Germany: Services sector improves more quickly in April
The HCOB Germany Services Purchasing Managers’ Index (PMI) rose to 53.2 in April from 50.1 in March, marking a 10-month high. 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.
April’s result reflected growth in new business driven by stronger underlying demand, particularly from domestic sources, and an acceleration in job creation, fueled by a buildup of backlogs of work. Moreover, new work from abroad declined at the softest pace in over half a year, indicating a potential stabilization in international demand.
Turning to prices, operating expenses for service providers continued to rise sharply, primarily due to higher wages and energy prices, although cost inflation eased slightly for the second consecutive month. In response to higher costs and stronger demand, service firms raised their prices, with the rate of output charge inflation reaccelerating slightly from the slowdown seen earlier in Q1. Lastly, business expectations remained positive, with service firms forecasting a rise in activity over the year ahead, driven by the prospect of lower interest rates, and plans for greater marketing activity and workforce expansion.