FX.co ★ Private Sector Activity in Germany Softens

The HCOB Flash Germany Composite PMI dropped to 51.5 in December 2025, marking a four-month low, down from November's 52.4 and falling short of the anticipated 52.4. This decline indicates a continued weakening in private sector growth since October's peak, primarily due to weakened underlying demand. New business inflows have stagnated, and there has been a slight reduction in employment. The growth rate in the services sector has decreased to its lowest level since September (now at 52.6 from 53.1), while conditions in the manufacturing sector have deteriorated further (falling to 47.7 from 48.2), with production levels slipping back into contraction, ending a nine-month growth streak. Despite this general slowdown, inflationary pressures have intensified. Both operating expenses and service sector prices have risen more rapidly, and for the first time in nearly three years, manufacturers have experienced an increase in input costs, amid emerging supply chain pressures. Additionally, firms’ growth expectations have declined to an eight-month low.