German Preliminary Manufacturing PMI unexpectedly declines to 46.5 in February

• German Manufacturing PMI arrives at 46.5  in February vs. 47.8 expected.
• Services PMI in Germany jumps to 51.3 in February vs. 51.0 expected.
• EUR/USD keeps losses near 1.0670 on mixed German PMIs.

The German manufacturing sector contraction unexpectedly deepened in February even as supply bottlenecks eased rapidly, the preliminary manufacturing activity report from S&P Global/BME research showed this Tuesday.

The Manufacturing PMI in Eurozone’s economic powerhouse came in at 46.5 this month vs. 47.8 expected and 47.3 prior. The index dropped to a new three-month low.

Meanwhile, Services PMI jumped from 50.7 in December to 51.3 in February as against the 51.0 consensus forecast. The PMI hit the highest level in eight months.

The S&P Global/BME Preliminary Germany Composite Output Index arrived at 51.1 in February vs. 50.4 expected and January’s 49.9. The gauge recorded its best level in eight months.

Key comments from Phil Smith, Economics Associate Director at S&P Global

“February’s flash PMI survey showed the German private sector economy return to growth territory for the first time eight months, alongside continued resilience in the labor market and a further slight recovery in business confidence.”

“Encouragingly, the increase in business activity was broad-based by sector. However, whereas the upturn in services activity was at least partly demand-related, higher manufacturing output owed almost exclusively to a substantial easing of supply-chain bottlenecks, which merely allowed goods producers to catch up on backlogs of work.”

FX implications

EUR/USD is keeping its downside momentum intact at around 1.0670 on the mixed German data.