German HCOB Composite PMI Flash (Feb) 53.1 vs. Exp. 52.3 (Prev. 52.1, Low. 51.8, High. 52.7)

• “GDP in Germany is likely to have grown visibly in the first quarter, unless there is a major slump in March, for which there is no indication in the data. Companies in both the service sector and the manufacturing industry are also quite optimistic about the next twelve months which bodes well for GDP growth of more than 1% this year, which is our expectation.”
• "It is particularly encouraging that new orders have risen robustly, suggesting that production growth will continue in the coming months. This view is supported by order backlogs, which have risen for the first time since mid-2022, albeit only moderately."
• "Companies remain very cautious in their personnel planning and have cut jobs for the second month in a row. This is consistent with the fact that service providers were able to achieve slightly less strong price increases. Overall, however, it seems possible that the pleasant developments in industry will spill over into the service sector in the coming months."
• “In industry, companies are facing accelerating increases in purchase prices. This is likely to be partly due to higher energy prices."

The German HCOB Composite PMI coming in at 53.1, above expectations, indicates solid growth momentum in the economy, suggesting GDP growth could exceed 1% this year. The rise in new orders and industry optimism bodes well for continued production growth, although ongoing job cuts reflect caution in personnel planning, potentially tempering any inflationary pressures from rising input costs due to energy price increases.