Business activity contracted again in March but by less than shown in the provisional data. Hence, the 47.4 flash composite output index was revised up to 47.7, a 4-month high but still short of the 50-expansion threshold.

The headline revision reflected the first increase in service sector activity in six months. At 50.1, the final sector PMI was up 0.3 points versus its flash estimate and now nearly 2 points stronger than February's final 48.3. New business continued to decline but the decrease eased for a second successive month and was the least marked since the downturn began in July last year. Falling backlogs continued to support output but the drop here was similarly the most shallow since the middle of 2023. Job creation remained positive, albeit down from February's 8-month high, and business expectations about the coming year improved to their highest level since February 2022.

Input cost inflation fell to its lowest point since last October but remained well above its long-run average. Output prices rose at a reduced pace but were also elevated by historical standards.

While the headline revision is good news, today's update still leaves a fairly gloomy picture of the German economy in general and of the manufacturing sector in particular. First quarter GDP growth should be negative. That said, with the German RPI at 14 and the RPI-P at 30, the downswing at least looks likely to be less steep than currently anticipated.

No revisions are expected leaving the composite output index at 47.4, up from February's final 46.3.

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.