FX.co ★ German Services Contract More Than Initially Estimated

In May 2025, the HCOB Germany Services PMI declined to 47.1 from April's 49, marking a more significant downturn than the preliminary estimate of 47.2 had suggested. This figure represents the most pronounced decrease in services activity since November 2022, largely attributed to sluggish demand and prevailing uncertainties. New business orders continued their downward trend for the ninth consecutive month, with foreign orders plummeting to their lowest since December 2023. While employment rose for the fifth consecutive month, the rate of increase has slowed within the current hiring period. On the pricing front, cost pressures have slightly eased, as input inflation decreased, although it remains above the historical average primarily due to wage hikes. Output price inflation has also decelerated to a seven-month low but still remains higher than pre-pandemic levels. Although there was a slight improvement in business confidence following April's downturn, the overall sentiment remains subdued due to ongoing geopolitical concerns.