Germany's services sector continued to expand in November, but momentum eased, signalling a cautious shift in business conditions. The services PMI slipped to 53.1 from 54.6, while the composite PMI fell to 52.4, both marking two-month lows. Growth in new work and employment persisted yet slowed, suggesting that demand remains supportive but is losing some of its earlier strength. Firms also reported a renewed decline in backlogs of work, indicating that existing capacity is more than sufficient to meet current demand.

Inflationary pressures softened noticeably. Operating costs rose at a slower pace, driven largely by wage growth, and firms showed restraint in raising selling prices. The rate of output price inflation eased to its second-lowest point in over four years, hinting at improved cost stability across the sector.

However, business confidence weakened for the second month, falling below the historical trend as firms expressed concerns about political uncertainties and elevated costs. Overall, the sector remains in expansionary territory, but the moderation in activity, softer new business inflows, especially from abroad, and fragile sentiment suggest that the recovery is becoming more tentative heading into the year's end. This latest update takes the RPI to minus 1 and the RPI-P to minus 2, meaning that economic activities are now within the expectations of the German economy.

No revision expected from the flash at 52.1 for composite and 52.7 for services.

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.