The HCOB Flash Germany Composite PMI (Purchasing Managers Index) increased to 52.5 in January 2026 from 51.3 in December and has exceeded expectations of 51.6.
The PMI indicates improvement for the private segment, led primarily by the service sector, which experienced an acceleration of growth. However, manufacturing continued to contract but at a less severe rate than in the previous months.
New orders supported the composite PMI increase, with business confidence surging to its highest level since February 2022. “The indicators point to a solid start for 2023. Manufacturing output has just returned to – but not much – growth. Manufacturing new orders increased modestly, along with new services orders.”
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Looking ahead, confidence has risen within the service sector but has remained stable within manufacturing. “Even with early signs of recovery, services firms have cut their workforce significantly throughout January within both the service and manufacturing sectors, pointing more toward efficiency advances rather than demand concerns. In addition, the businesses are also facing a significant increase in input costs, which augments the inflationary pressures.
The question is whether ongoing cuts in manufacturing alternative forms create a structural issue requiring structural answers via reforms,” said Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.
