Germany Services Growth Slows Slightly in October

Germany’s S&P Global Services PMI was revised higher to 52.5 in October 2026 from a preliminary estimate of 51.7, but eased from 52.9 in September. This indicated continued expansion for a second consecutive month, albeit at a slightly slower pace, as new business inflows declined again, partly due to weaker domestic and foreign demand. Meanwhile, activity was supported by work on outstanding orders. Employment also fell for the first time since July, marking the sharpest decline in six months. On the price front, input cost inflation eased for the first time in four months, partly reflecting the reinstatement of fuel discounts, although price pressures remained elevated by historical standards. Output price inflation also moderated. Despite softer demand and declining employment, business confidence improved to its highest level since February, supported by hopes of a recovery in economic conditions.

Germany’s Services PMI fell to 51.7 in October 2026 from 52.9 in September, missing market expectations of 52.5, according to preliminary data. Although activity expanded for a second consecutive month, growth remained modest as demand stagnated amid delayed customer decisions and tighter client budgets. Services firms also reported a renewed decline in outstanding work. Despite easing capacity pressures at the start of the fourth quarter, companies continued to recruit, marking a third consecutive month of employment growth. However, job creation remained marginal and unchanged from September. On the price front, input cost inflation slowed, partly reflecting fuel discounts, while service providers moderated their own price increases amid competitive pressures. Looking ahead, business confidence in the services sector improved to its highest level since February, indicating stronger growth expectations despite subdued demand and limited momentum in current activity.

The S&P Global Germany Services PMI climbed to a 7-month high of 52.9 in September 2026 from 49.7 in August, matching the preliminary estimate. The improvement was driven by stronger demand, with new business increasing for a third consecutive month and growing at its fastest pace since November 2025. Firms also reported greater investment spending and improved client demand, while new business from overseas rose for a second month, although the pace of growth moderated from August. Employment increased for a second consecutive month. Capacity pressures also became more visible, as outstanding work accumulated at the fastest rate since June 2022, despite the increase remaining modest. The recovery was accompanied by renewed inflationary pressure, with input costs rising at a pace only slightly below April’s recent peak. Higher costs contributed to a faster increase in prices charged by service providers.