Germany April flash manufacturing PMI 51.2 vs 51.4 anticipated

• Prior 52.2
• Services PMI 46.9 vs 50.4 expected
• Prior 50.9
• Composite PMI 48.3 vs 51.2 expected
• Prior 51.9

The US-Iran war is clearly weighing on economic activity as growth slows down further while inflation rises. The composite PMI fell into contraction for the first time since May 2025.

The agency notes: “The recovery in the German economy has been stopped in its tracks by the war in the Middle East. The manufacturing sector saw output and new orders edge higher, although there are warning signs that it could slip back into contraction. There’s seemingly been little spillover to the labour market as yet, with jobs being cut at only a slightly faster rate than the trend in the months before the war started. That could change if activity remains supressed and energy prices remain elevated”.

This is not going to change anything for the ECB as the central bank has already signalled it’s going to keep interest rates steady in April as it gathers more information. It’s going to be hard though to hike rates into an economic slowdown as it could exacerbate the negative effects.