Germany December final services PMI 52.7 vs 52.6 prelim

• Prior 53.1
• Final Composite PMI 51.3 vs 51.5 prelim
• Prior 52.4

Key findings:

• Business expectations drop to lowest since last April

Comment:

Commenting on the PMI data, Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“Business activity in the private service sector grew for the fourth month in a row. Although the pace of expansion has
slowed slightly, it can still be described as relatively robust. In this environment, companies also found themselves
compelled to hire more staff than the month before, after having even reduced employment at times in 2025. The moderate
growth in new business suggests that the start to the new year could be satisfactory.

“Service companies are in a position to pass on the rise in costs to their customers, albeit only partially. Taken on its own,
this points to favourable, but not spectacular demand conditions. The higher costs are likely to be primarily the result of
continued above-average wage increases. This is because most service activities are relatively labour- and wage-intensive.
This cost problem is unlikely to disappear in the coming year, as the main cause is demographic change and the resulting
labour shortage, which continues to prevail in many sectors despite the generally weak economy.

“Confidence among service providers has deteriorated significantly with regard to the next twelve months. The index of
future activity has slipped to its lowest level since last April, putting it around three-and-a-half points below the long-term
average. This may be due to dissatisfaction with the government, as many companies believe that the reforms that have
been adopted are heading in the wrong direction or are not comprehensive enough. However, experience shows that
sentiment can also change quickly, so this is only a snapshot of the current situation.”

This article was written by Giuseppe Dellamotta at investinglive.com.