German factory output shows signs of recovery in April - PMI

BERLIN (Reuters) -

Germany's manufacturing sector contracted at the slowest rate in more than 2-1/2 years in April as output rose at the quickest rate for more than three years, a business survey showed on Friday.

The HCOB Germany Manufacturing PMI compiled by S&P Global rose to 48.4 in April from 48.3 in March, taking the index to its highest level since August 2022, although remaining below the 50.0 threshold indicating growth.

April saw a consecutive rise in production levels across the sector, with growth accelerating to the fastest since March 2022, supported by a stronger expansion in investment goods.

New orders also increased for the second month, though at a slower pace, with export sales rising marginally for the first time since early 2022, the survey showed.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank AG, sounded a note of caution on the figures, however.

"It is quite possible that the expansion in production over the past two months is due to pull-forward effects in connection with the impending US tariff increases, which means that there might be a backlash in the coming months," he said.

Germany is expected to be hit hard by tariffs due to its export-oriented economy. The U.S. was Germany's biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros.

Despite the positive output trends, manufacturers' optimism over future business sank to its lowest level in four months.

(Reporting by Maria Martinez; Editing by Hugh Lawson)