Germany’s services sector contracted in August, with the final S&P Global Germany Services Purchasing Managers’ Index (PMI) slipping to 49.7 from 49.8 in July, according to data published on Wednesday. The reading remained above the preliminary estimate of 48.5 but stayed below the 50.0 threshold that separates growth from contraction.
The broader composite index, which combines services and manufacturing activity, rose to 51.8 in August from 51.3 the prior month, indicating modest expansion across the economy. S&P Global attributed the divergence to ongoing cost pressures in services, where restrictive financial conditions and cautious consumer spending weighed on business activity.
New business in the services sector increased for a second consecutive month, accelerating from July’s pace. Overseas sales also expanded, marking the first month of growth since February and the strongest increase since May 2023. Employment in the sector returned to growth after eight months of declines, with the pace of hiring reaching its highest level since October 2025.
Phil Smith, Associate Director of Economics at S&P Global Market Intelligence, noted that while the headline services index had yet to enter expansion territory, underlying indicators pointed to improving stability. "We are seeing a more stable picture in terms of business activity in the services sector than a few months ago," Smith said. "There are grounds for optimism in the underlying demand and employment indicators."
