Germany's service sector showed signs of stabilisation in June 2025, with the services PMI rising to 49.7, up from 47.1 in May, a three-month high and close to the neutral 50 mark. This indicates that the sector is nearing a turnaround after months of contraction. The Composite Output Index also improved to 50.4, suggesting modest expansion when including manufacturing. Job creation picked up slightly as firms became more optimistic, aided by government stimulus, lower interest rates, and planned new offerings.

While new business inflows declined for the tenth consecutive month, the pace of decline was only marginal, and backlogs fell at the slowest rate in over a year, both hinting at a gradual easing of demand-side pressure. Importantly, inflationary pressures continued to moderate. Input cost growth slowed to its weakest since March, and firms passed on smaller price increases to customers, resulting in the lowest rate of output price inflation since October 2024.

Overall, June's data suggest a cautious return of business confidence and improving labour market conditions, though weak demand and international orders still weigh on recovery momentum. Sustained optimism and policy support will be critical for the sector's revival in the second half of the year. The latest update takes the RPI to minus 15 and the RPI-P to minus 5. This means that economic activities in Germany are slightly behind market expectations.

No change from the flash at 50.4 is the call for the June composite final, up from 48.5 in May. No change is expected from the flash at 49.4 for services, up from 47.1 in May.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global.

The Purchasing Managers Index (PMI) survey has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the European Central Bank) use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.