Germany's Manufacturing Sector Returns to Growth After 3.5 Years as PMI Beats Expectations

Economic Activity Gains Momentum Economic activity in Germany accelerated in February.
The Composite Purchasing Managers' Index (PMI) rose from 52.1 points in January to 53.1 points in February, reaching its highest level in four months.
This figure significantly exceeded market expectations of 52.3 points, confirming that economic activity remains above the 50-point threshold that separates growth from contraction.
First Manufacturing Growth in 3.5 Years The most notable development in the February data occurred in the manufacturing sector, which had been in contraction for a long period.
The manufacturing PMI climbed from 49.1 to 50.7 points, marking a 44-month high.
With this increase, the sector entered growth territory for the first time in 3.5 years.
Meanwhile, the services sector PMI rose from 52.4 to 53.4 points during the same period, also reaching a four-month peak.
Order Backlogs and Future Outlook Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, stated that the increase in industrial production supports the recovery signals that began in January.
De la Rubia noted that order backlogs increased for the first time since mid-2022, emphasizing that momentum in new orders will continue to support production in the coming months.
Government infrastructure projects and increased defense spending are specifically expected to provide further impetus to the industry.
2026 Growth Projections The performance of the manufacturing and services sectors, which represent more than two-thirds of the German economy, has increased optimism regarding GDP growth.
After recording a limited growth of 0.3% in the final quarter of 2025, the German economy is projected to grow by 1% throughout 2026, supported by public spending.