Published by Global Banking and Finance Review
Posted on June 4, 2025
BERLIN (Reuters) -Germany's services sector recorded its sharpest contraction in activity in 2-1/2 years in May as weaker demand and heightened uncertainty took their toll, a survey showed on Wednesday.
The final HCOB Purchasing Managers' Index (PMI) for the services sector fell to 47.1 in May, down from 49.0 in April, marking its lowest level since November 2022.
PMI readings below 50.0 indicate a contraction in activity, while those above point to growth.
The survey found accelerated declines in both activity and new business, while the pace of job creation slowed.
"The service sector is no longer stabilizing the overall economy, it is slowing it down," said Hamburg Commercial Bank chief economist Cyrus de la Rubia.
Services firms in Europe's biggest economy, which is battling to avoid a historic third year of contraction in 2025, registered a reduction in inflows of new work in May for the ninth month in a row.
Despite a recovery in business expectations from April's recent low, confidence remained subdued by historical standards.
Nevertheless, de la Rubia said conditions for a recovery were "relatively good".
The HCOB's broader composite PMI index, which includes both manufacturing and services, slipped into contraction in May, falling to 48.5 from 50.1 in April, reflecting slower growth in manufacturing production and the accelerated decline in services activity.
(Reporting by Rachel More; Editing by Hugh Lawson)
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