German Preliminary Manufacturing PMI unexpectedly drops to 42.3 in February vs. 46.1 expected

• Germany’s Manufacturing PMI dropped to 42.3 in February vs. the forecast of 46.1.
• Services PMI for the German economy rose to 48.2 in February vs. 48.0 expected.
• EUR/USD keeps gains above 1.0850 after mixed German PMIs.

Germany’s manufacturing sector contraction unexpectedly deepened in February while the services sector activity improved, according to the preliminary business activity report from the HCOB survey published on Thursday.

The HCOB Manufacturing PMI in the Eurozone’s economic powerhouse declined to 42.3 this month, as against the 46.1 expected and January’s 45.5. The index hit the lowest level in four months.

Meanwhile, Services PMI rose from 47.7 in January to 48.2 in February. The market expectations were for a 48.0 print in the reported period. The measure touched a fresh two-month high.

The HCOB Preliminary German Composite Output Index came in at 46.1 in February vs. 47.5 expected and 47.0 previous reading. The gauge tumbled to a four-month low.

FX implications

EUR/USD failed to react to the mixed German data. The pair is trading 0.45% higher on the day at 1.0865, as of writing.