Germany: Preliminary manufacturing PMI rises less than expected in April as services sector hits 10-month high

The Purchasing Managers Index Germany's manufacturing PMI published by HCOB has risen three tenths in the preliminary reading for April, rising to 42.2 points compared to 41.9 in March. The figure disappoints the market's expectations of a rise to 42.8. He indicator remains in contraction territory for the twenty-second consecutive month.

The services PMI, however, has risen 3.2 points, rising to 53.3 from the previous 50.1, showing its best record in ten months. Furthermore, the indicator has exceeded the 50.6 points expected by consensus.

Finally, the composite PMI has increased 2.8 points to 50.5, entering expansion territory for the first time in ten months. The figure has improved the 48.6 points estimated by experts.

The German private sector returned to growth at the beginning of the second quarter, the latest HCOB survey compiled by S&P Global showed, boosted by a solid increase in service business activity. Although the manufacturing sector continued to contract, the pace of decline in factory output eased and confidence among goods producers about the outlook reached its highest level in a year. On the price front, inflation rates of both input costs and output prices increased, but were still broadly in line with their respective long-term averages.

Euro reaction

The Euro has risen strongly following the publication of PMI data from France and Germany, which have presented mixed results, as the services sector strengthens while the manufacturing sector remains firmly anchored in contraction territory. He EUR/USD has shot higher, also driven by the weakening of the Dollar and a rebound in risk appetite. The pair has reached an eleven-day high at 1.0695 and is trading at the time of writing above 1.0680, gaining 0.24% on the day.