Germany’s manufacturing sector expanded at its fastest pace in 51 months in August, according to preliminary PMI data released Friday, while services activity contracted for a fifth consecutive month.
The flash HCOB Germany Composite Output PMI fell to 51.0 from 51.3 in July, marking a two-month low but still indicating expansion. The manufacturing PMI rose to 54.1 from 52.2, the highest reading since May 2021, while the services PMI dropped to 48.5 from 49.8, signaling contraction.
Manufacturing output also climbed to 56.7 from 54.7, the strongest gain in 55 months, driven by a surge in new orders and export sales not seen since early 2022. Firms cited inventory rebuilding, increased defense spending and data center construction as key tailwinds.
Employment trends remained mixed: overall staffing levels stabilized after 26 months of decline, as modest hiring in services offset continued job cuts in manufacturing. Business sentiment improved to its highest level since February, with manufacturers notably more optimistic about future prospects.
Price pressures eased slightly, with output price inflation at its lowest since March. Service providers reported slower tariff increases, while manufacturers maintained elevated pricing power amid strong demand.
Phil Smith, associate director of economics at S&P Global Market Intelligence, noted that manufacturing recovery momentum has rebounded after softening in the second quarter.
