Germany June PMI: Manufacturing and Services Output Show Signs of Recovery

Germany June PMI reveals encouraging signs, as both manufacturing and services output reach multi-month highs. The Germany June PMI data, released by Hamburg Commercial Bank (HCOB), highlights a possible turning point for Europe’s largest economy, signaling a shift in momentum as we move into the second half of 2025.

Germany June PMI: Key Findings at a Glance

• Composite PMI Output Index rose to a 3-month high of 50.4 (prior 48.5), beating forecasts.
• Services PMI climbed to 49.4 (prior 47.1), surpassing expectations.
• Manufacturing PMI rose to 49.0 (prior 48.3), in line with forecasts.
• Manufacturing Output Index reached a 39-month high, while the headline PMI hit a 34-month high.

For four consecutive months, Germany’s manufacturing sector has shown steady growth in output, suggesting a sustained improvement even as the headline PMI remains just below the crucial 50-mark, which separates expansion from contraction.

What Do the June PMI Numbers Mean for Germany’s Economy?

The Purchasing Managers’ Index (PMI) is a leading economic indicator that tracks business activity in the manufacturing and services sectors. June’s data points to a possible end to Germany’s recent stop-start growth pattern, according to Dr. Cyrus de la Rubia, Chief Economist at HCOB:

“It looks like Germany’s manufacturing sector might finally be turning a corner. For four months in a row now, production has been ticking up... At 49 points, the headline index is still slightly in recessionary territory, due to factors such as further job cuts, but the trend has been upward since the beginning of the year. It is also encouraging that order intakes have returned to growth...” – Dr. Cyrus de la Rubia, Chief Economist, HCOB

Manufacturing PMI: Output and Orders Improve

The Germany June PMI manufacturing index at 49.0 is the highest in nearly three years, driven by both rising output and a return to order growth. Although the figure remains just below 50, it reflects improving demand conditions. Importantly, companies reported drawing down inventories to meet stronger-than-expected demand—a trend that could indicate further production increases in the coming months if business confidence grows.

The output index hit a 39-month high, while the headline PMI is at a 34-month high. This sustained momentum could mark the beginning of a broader upturn for German industry, especially if order books continue to grow.

Services PMI: Stabilization After Recent Slump

In the services sector, the PMI rose to 49.4, above the previous month and market forecasts. Although activity is still slightly in contraction, the decline has slowed. Companies in the services sector increased staffing levels and implemented stronger price increases than in May, suggesting improved business conditions.

Inventory reductions, while often a warning sign, were likely a response to stronger demand, rather than a signal of weakness. This adjustment could support growth in the second half of 2025.

Is Germany’s Economy Set for Recovery?

Recent economic growth in Germany has been marked by volatility—one quarter of expansion followed by another of contraction. However, the upward trend in the Composite PMI, and early effects of expansionary government policies, raise hopes that Germany may finally break free from this cycle.

Dr. de la Rubia notes, “There is a decent chance Germany could finally break out of the frustrating stop-start growth pattern it’s been stuck in for the past two years... We are confident about the second half of the year anyway, as the new federal government's initial expansionary measures could then take effect.”

Why the PMI Matters for Investors and Policymakers

The PMI is closely watched because it signals shifts in business sentiment and the economic outlook. Rising PMI figures suggest companies are seeing more orders, hiring more staff, and raising prices—factors that can influence everything from interest rates to government policy.

For investors, an improving PMI can hint at better earnings for companies in both manufacturing and services. For policymakers, it’s a sign that stimulus measures or interest rate policy may be having the desired effect, or that adjustments could be needed if growth falters.

What to Watch Next

• Will the Germany June PMI continue to improve in July and August, confirming a sustained recovery?
• Can the services sector move into expansion and support broader growth?
• Will inventory drawdowns lead to renewed production increases and hiring?
• How will global factors, such as US tariffs or supply chain shifts, impact Germany’s recovery?

The coming months will be critical in confirming whether Germany’s economy is set for a true turnaround, or if caution will persist among business leaders.

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