Published by Global Banking and Finance Review
Posted on October 24, 2025
BERLIN (Reuters) -Germany's private sector recorded its strongest growth in nearly two-and-a-half years in October, buoyed by a robust rise in services activity, a survey showed on Friday.
The HCOB preliminary German flash composite Purchasing Managers' Index, compiled by S&P Global, rose to 53.8 in October from 52.0 in September, marking the fastest growth since May 2023 and surpassing analysts' expectations of 51.5.
October marks the fifth month in a row that the composite index, which tracks the services and manufacturing sectors that together account for more than two-thirds of the euro zone's largest economy, was above the 50 mark indicating growth.
Services led the charge with the sharpest increase in business activity in more than two years, with the corresponding index climbing to 54.5 in October from 51.5 in September.
"This is an unexpectedly good start to the final quarter," said Hamburg Commercial Bank chief economist Cyrus de la Rubia, also indicating that manufacturing output rose for the eighth consecutive month, albeit at a slower pace than in September.
The manufacturing PMI, however, remained in contraction territory even though it improved slightly to 49.6 in October from 49.5, beating expectations for it to remain stable.
"These are good conditions for growth in the fourth quarter," he said.
"However, the fact that the outlook for the future is more cautious than in the previous month, both among service providers and in industry, shows that the economic situation remains fragile," added de la Rubia.
Business expectations for the year ahead have softened, with concerns over domestic economic weakness, geopolitical tensions and high costs clouding the outlook, according to the survey.
Employment in the private sector continued to decline, albeit at a slower rate, with October marking the 17th month of cuts, the longest stretch since the 2008-10 financial crisis.
(Reporting by Miranda Murray; Editing by Toby Chopra)
