Germany’s Private Sector Contracts in April

Germany’s S&P Global Composite PMI fell to 48.3 in April 2026, down sharply from 51.9 in March and below market expectations of 51.1, according to preliminary data. This marks the first contraction in the country’s private sector since May 2025, and the steepest decline since December 2024, as the ongoing war involving Iran disrupted Germany’s fragile economic rebound, dampening demand and pushing prices higher. The services sector drove the downturn, experiencing its sharpest decline in activity since late 2022, while manufacturing output growth also slowed.

Germany’s S&P Global Composite PMI fell to 51.9 in March 2026, down from 53.2 in February, marking the weakest private-sector expansion this year. The ongoing Middle East conflict has dampened growth in the service sector, while manufacturing output surged to a 49-month high, driven by supply chain disruptions that paradoxically boosted factory activity. New business remained largely stable, as declining service demand was offset by a rise in factory orders. However, employment declined across sectors, and business confidence for the year ahead weakened. Cost inflation increased, particularly in manufacturing, though average output prices rose at only a slightly faster rate.

The S&P Global Flash Germany PMI Composite PMI fell to 51.9 in March 2026 from 53.2 in February, compared to forecasts of 52. The reading pointed to a slowdown in growth in Germany’s private sector to its lowest level in three months. The result owed entirely to a loss of momentum in the service sector, where business activity growth slowed (51.2 vs 53.5). By contrast, the rate of expansion in manufacturing production quickened to an over 4-year high (53.7 vs 52.5), buoyed by stronger inflows of new orders. There were reports of the Middle East war leading to increased demand, as some customers looked to avoid supply disruption and build up stocks. At the same time, there was a spike in cost pressures linked to the war, with input price inflation rising to the highest for over three years, mainly due to energy, fuel, transportation, wages and a range of raw materials. Also, there was a further broad-based drop in employment and business expectations fell noticeably.