Germany — PMI (March): slowdown in recovery

Facts
• Composite PMI: 51.9 ↓ (was 53.2)
• Services PMI: 50.9 ↓ (was 53.5)

Interpretation
• Value above 50 = growth, but:
• Sharp decline = loss of momentum
• Services sector is almost at the stagnation boundary (50)

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What does this mean in terms of structure

1. Services — Europe’s key driver
• It was services that pulled the economy higher
• Now: a sharp cooling in demand
• Reasons:
• decline in consumption
• inflation pressure
• high borrowing costs

2. The composite index is falling
• The economy remains in growth, but:
• the growth rate is slowing → early slowdown phase

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Macro takeaway
• Germany = the EU’s locomotive
• Weak PMI → a signal for all of Europe

Scenario:
• Transition from recovery → to slowdown / sideways
• Recession risk is rising again

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For markets

1. EUR
• Downward pressure
• Reason: weak economy + expectations of easing by the European Central Bank

2. Europe’s stock market
• Short-term: neutral/negative
• Services sectors under pressure

3. Interest rate policy
• The argument for rate cuts is strengthening
• The ECB gets the signal: the economy is cooling down

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Practical takeaway
• This is not a crisis, but a loss of momentum
• Key level: PMI ~50
• below → contraction
• above → weak growth

Now:
→ Germany on the brink of stagnation
→ Europe follows suit

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If we add to this:
• a weak industrial sector
• expensive energy
• geopolitics

→ we get a structurally weak EU economy for 2026