German Preliminary Manufacturing PMI drops to 58.5 in February vs. 59.5 expected

• German Manufacturing PMI arrives at 58.5 in February vs. 59.5 expected.
• Services PMI in Germany expands to 56.6 in February vs. 53.0 expected.
• EUR/USD keeps its uptrend intact above 1.1350 on mixed German PMIs.

The German manufacturing sector slows its pace of expansion in February, the preliminary manufacturing activity report from IHS/Markit research showed this Monday.

The Manufacturing PMI in Eurozone’s economic powerhouse came in at 58.5 this month vs. 53.0 expected and 52.2 prior. The index clocked two-month lows.

Meanwhile, Services PMI rebounds from ten-month lows of 52.2 booked previously to 56.6 in February and as against 53.0 estimated. The PMI jumped to the highest level in six months.

The IHS Markit Flash Germany Composite Output Index arrived at 56.2 in February vs. 54.3 expected and January’s 53.8. The gauge hits a six-month top.

Key comments from Phil Smith, Economics Associate Director at IHS Markit

“The German economy continued to regain momentum in February following December’s brief stagnation in output growth. Overall activity rose the most since last August, driven this time by the services sector as manufacturing production increased more slowly than in January when it had provided the main impetus.”

“Although goods production rose at a softer pace, data on new orders showed the fastest rise in six months. Moreover, supply chain pressures appeared to ease further as average lead times lengthened to the least extent since November 2020. Inflationary pressures remained strong, however.”

FX implications

EUR/USD is holding the higher ground well above 1.1350, adding 0.47% on the day. The spot extends its gains amid the risk-on market mood, as investors remain hopeful for de-escalation of the Russia-Ukraine crisis.