Germany's services sector regained momentum in October, with the services PMI climbing to 54.6 from 51.5 in September, signalling its strongest expansion in twenty-nine months. The broader composite PMI also reached a 29-month high of 53.9, driven by increased new work orders.

The uptick in activity came due to stronger demand and improvements in new work orders despite a slight decline in export sales. The rise in new work orders was mainly due to rising domestic demand. October reflected an increase in employment for the first time in three months.

Wage pressure remained one of the drivers of inflation. Input prices rose at a quicker pace than in September, reaching its highest since April. Prices charged also increased at a quicker pace, pushing output price inflation to its highest since February.

Optimism prevailed, with business expectations remaining above the long-run average. Firms were hopeful of stronger economic conditions ahead. Indeed, October's update suggests activity is picking up, as demand recovers from September's slump. This latest update takes the RPI to 5 and the RPI-P to minus 3, meaning that economic activities are now within the expectations of the German economy.

The consensus sees no change from the flash for composite at 53.8 or services at 54.5.

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.