23-Jun-2025 13:28

Business activity returned to growth across Germany in June, ticking up slightly after falling for the first time in five months in May, according to the latest HCOB 'flash' PMI survey data.

The upturn was led by the manufacturing sector and supported by a first increase in overall new orders for more than a year. Firms in the eurozone's largest economy nevertheless continued to trim workforce numbers and were a little less optimistic about the year-ahead growth outlook than the month before.

On the price front, the rate of inflation in average charges for goods and services ticked up from May's seven-month low, bringing it back just above its long-run average. That was despite firms' input costs rising at the slowest rate since October last year.

The HCOB Flash Germany Composite PMI Output Index came in at 50.4 in June, rebounding from a five-month low of 48.5 in May. The latest reading signalled a modest rate of expansion as growth in manufacturing production was partly offset by a further ' albeit slower ' reduction in services activity.

Output in the goods-producing sector in fact recorded its strongest rise since March 2022 (index at 52.6), to extend the current sequence of growth to four months. The drag from the service sector meanwhile eased, with activity in this segment of the economy falling only marginally and at the weakest rate in the current three-month sequence of contraction.

Underlying demand conditions showed signs of strengthening at the end of the second quarter, as underscored by the first rise in total inflows of new work across the private sector since May last year.

June flash data indicated another broad-based reduction in backlogs of work across the German private sector.

Turning to prices, June's flash survey results indicated an uptick in the rate of output charge inflation. Lastly, preliminary data for June showed a slight reduction in businesses' optimism towards growth prospects in the next 12 months.

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