Eurozone business activity rises as Germany’s manufacturing rebounds #NewsGerman

Europe’s economic engine might finally be shifting into gear, as a rebound in German manufacturing and easing price pressures across the euro area offered a glimmer of hope that the continent’s economy could be turning a corner.

The latest business surveys, known as Purchasing Managers’ Indexes (PMIs), revealed that the eurozone’s private sector expanded for a third consecutive month in March.

The Hamburg Commercial Bank Flash Eurozone Composite PMI, a key gauge compiled by S&P Global that tracks activity in both services and manufacturing, ticked up to 50.4 from 50.2 in February.

That marked a seven-month high, though it fell slightly short of consensus expectations for 50.8. Readings above 50 indicate growth, while anything below signals contraction.

Eurozone’s manufacturing output returned to growth, expanding for the first time in two years and reaching the highest level since May 2022.

This resilience largely stems from a surprising rebound in Germany’s manufacturing sector, where producers grew more confident following the announcement of a new fiscal package.

“There is some likelihood, that Europe seizes the opportunity and shows more unity with respect to reforms, defence spending, and completing the capital market union, to name a few things,” Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said.

While manufacturing surprised positively, growth in services activity slowed. The services PMI slipped to 50.4, from 50.6 in February, missing expectations of 51.

Another bright spot was a notable easing in inflationary pressures. The rate of input cost inflation — a measure of what companies pay for materials and services — slowed to its lowest since November, ending a five-month streak of acceleration. Similarly, selling price inflation softened, with the pace of increase the weakest in 2025 so far.

Related

That could give the European Central Bank more breathing room as it considers when to begin cutting interest rates. Analysts have speculated that rate reductions could resume as early as June, provided inflation continues to trend toward the ECB’s 2% target.

“The price development in the services sector, which is very much under the scrutiny of the ECB, will be well received by the doves of the monetary authority,” said de la Rubia.

Germany’s composite PMI climbed to 50.9 in March from 50.4 the previous month, marking its strongest performance since May 2024. While still modest by historical standards, the reading confirms that Europe’s largest economy is slowly finding its footing.