FX.co ★ German Private Sector Growth Slows, Cost Pressures Rise

The S&P Global Flash Germany Composite PMI slipped to 51.9 in March 2026 from 53.2 in February, undershooting market expectations of 52. The latest reading signals a further moderation in private sector growth, bringing it down to a three‑month low.

The slowdown was driven entirely by the service sector, where business activity growth weakened markedly (51.2 vs. 53.5). In contrast, manufacturing output accelerated to its fastest pace in more than four years (53.7 vs. 52.5), supported by a stronger influx of new orders.

Survey respondents reported that the war in the Middle East had boosted demand, with some customers seeking to pre‑empt potential supply chain disruptions by building up inventories. At the same time, the conflict contributed to a sharp rise in cost pressures: input price inflation climbed to its highest level in over three years, largely reflecting increased costs for energy, fuel, transportation, wages, and a broad range of raw materials.

Meanwhile, employment continued to fall across the private sector, and business expectations deteriorated noticeably.