Germany's economic downturn eased slightly in March as business activity in the country’s service sector came close to stabilising, a preliminary survey showed on Thursday.
The HCOB German Flash Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 47.4 in March from 46.3 in February. That was in contrast to forecasts in a Reuters poll for an increase to 47.0.
March was the ninth month in a row with a reading below the 50 mark, which points to a contraction in business activity.
"Overall, Germany now teeters on the edge of a technical recession," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
The composite PMI index tracks the services and manufacturing sectors that together account for more than two-thirds of the German economy.
The uptick in the index was driven mainly by a near-stabilisation of business activity in the service sector, with the respective index rising to 49.8 from 48.3 in February, above the forecast of 48.8.
However, the manufacturing PMI index fell to 41.6 in March from 42.5 in February, declining to a 5-month low. The reading is below the forecast of 43.1 of Reuters poll.
"The manufacturing sector closed the first quarter of 2024 with a disconcerting rate of contraction, echoing the woes of the previous month," de la Rubia said.
Despite the challenges in the manufacturing sector, overall business confidence towards future activity continued to improve steadily, reaching its highest level for nearly a year.
However, despite a more optimistic outlook, the latest survey data showed a renewed – albeit slight – decline in employment.
