The German economy was slightly stronger than originally thought last month. The 53.9 flash composite output index was revised up to 54.2 and now stands 1.6 points above its final reading at the end of the first quarter. The latest reading points to the strongest growth in 12 months.

The upward revision to the headline index in part reflected stronger services where the 55.7 flash sector PMI was boosted to 56.0, also its best print in a year. Growth of new orders similarly hit a 12-month high notably due to the buoyancy of exports. Backlogs were up for a third successive month, although the rate of accumulation eased slightly versus March. Job creation was the most marked since November 2021, but business optimism about the year ahead was down slightly and just below its long run average.

Cost pressures remained elevated on the back of increased wages, but the inflation rate continued to slow and touched its lowest level since May 2021. A similar pattern was true for output price inflation which saw its weakest rate in just over a year and a half.

In sum, the updated April results suggest that GDP began the second quarter on a relatively robust note. Following a disappointingly flat first quarter performance, there is reason for expecting growth to move back into positive territory in the current period. To this end, the ECDI now stands at minus 10, indicating a very modest degree of underperformance by overall economic activity but with the ECDI-P at 2, real developments are evolving in line with market expectations.

No revisions are expected to the flash data leaving the composite output index at 53.9, up from March's final 52.6.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global.

The Purchasing Managers Index (PMI) survey has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the European Central Bank) use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.