Germany's manufacturing sector showed a fragile revival in April, with production growing fastest in over three years, fuelled by a modest upturn in export orders and a boost in investment goods. The manufacturing PMI rose marginally to 48.4, 0.4 points above the consensus forecast and signalling ongoing contraction but at a slower pace.

Output hit a 37-month high, yet business optimism faltered, dropping to its weakest in four months, revealing growing unease about the outlook. While new orders ticked up for a second month and firms cleared backlogs, employment continued to decline, albeit less sharply. Interestingly, despite falling input costs driven by a stronger euro and cheaper commodities, factory gate prices rose slightly for the first time in nearly two years, suggesting firms are cautiously reclaiming pricing power.

The overall picture shows that production momentum has returned, but confidence is waning amid tariff fears and persistent economic uncertainty. Germany's manufacturers appear to be in a delicate balancing act, ramping up activity while trimming staff and holding off on long-term bets. The latest update takes the German RPI to 32 and the RPI-P to 34. This means that economic activities are well ahead of the market consensus for the German economy.

The consensus sees no revision from the flash at 48.0.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 500 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are released by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the Markit PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.