Germany’s economic recovery accelerated as falling energy prices boosted industrial growth. Data published on Wednesday showed that the country’s factory orders rose by 4.8% in February after rising by 0.5% in the previous month. It was the third straight month that orders rose.
Additional data revealed that the country’s services sector was doing much better than the manufacturing industry. According to S&P Global, the services PMI increased from 50.9 in February to 53.7 in March. This increase was lower than the median estimate of 53.9.
The composite PMI figure jumped from 50.7 to 53.9. The composite number considers both the manufacturing and services sector. On Monday, numbers revealed that the country’s manufacturing PMI declined to 44.5 in March. A PMI reading of 50 and below is usually a sign that a sector is contracting.
Meanwhile, for the region, data by S&P revealed that the services PMI increased from 52.7 to 55 in March,
The European economy has proven to be quite resilient in 2023, helped by the falling natural gas prices. As I wrote in this article, the price of gas has dropped to the lowest level since 2021 even after Russia slashed shipments to Europe.
Germany’s recovery has also been helped by falling inflation. Data published last week showed that the country’s inflation rose by 7.8% in March after rising by 9.3% in the previous month. There are signs that German inflation peaked at nearly 12% in December.
The strong economic recovery explains why the EUR/USD pair has been in a strong comeback in the past few months. It has jumped by more than 15% from the lowest level in October last year. Similarly, the DAX index has soared by over 31% from its lowest level in 2022.
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