German Services Sector Faces a Slowdown

In February, the German services sector experienced a noticeable slowdown, with the Services PMI Business Activity Index dropping to 51.1 from 52.5 in January. This figure represents a three-month low, as reported by S&P Global and Hamburg Commercial Bank on Wednesday.

Composite PMI Output Index Also Declines

Further indicating a cooling economy, Germany's Composite PMI Output Index slightly decreased to 50.4 from 50.5 in January, marking a two-month low. The report highlights that increasing employment is driving labor costs, contributing to inflationary pressures.

Economic Implications

"The growth in services activity has slowed since the beginning of the year, more than what was initially estimated by the flash HCOB PMI. While there is still some growth, the counterbalance to the manufacturing recession is less significant, placing the economy in a more vulnerable position," explained Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.