| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 51.5 | 51.5 to 51.5 | 51.3 | 52.4 |
| Services Index | 52.6 | 52.6 to 52.6 | 52.7 | 53.1 |
Highlights
Germany's services sector closed the year still expanding, but with a softer stride. December's services PMI of 52.7 confirms growth remains intact, yet the second consecutive monthly easing signals a sector settling into a lower gear. The slowdown reflects waning momentum in new business, even as a long-absent tailwind emerges from abroad, with foreign demand rising for the first time in eighteen months, partly led by Asia.
Labour market conditions remain supportive rather than exuberant. Employment increased for a third month, enabling firms to reduce backlogs at the fastest pace since September. This easing of capacity pressures contrasts with intensifying cost dynamics. Wage growth continues to push operating expenses higher, driving input cost inflation to a ten-month high and prompting firms to cautiously lift output prices.
The more concerning signal lies ahead. Business expectations have slipped to their weakest since April, underscoring a fragile confidence backdrop. Concerns around competitiveness, geopolitical uncertainty and rapid policy shifts are weighing on sentiment, suggesting that while services growth persists, it is increasingly defensive rather than dynamic as Germany enters the new year. This latest update takes the RPI to minus 15 and the RPI-P to minus 16, meaning that economic activities are underperforming compared to expectations in Germany.
Market Consensus Before Announcement
The final composite is expected unrevised at 51.5 in the final report for December from the flash and down from 52.4 in November. The final services index is expected unrevised from the flash at 52.6 in the final report for December and down from 53.1 November.
Definition
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.
Description
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.