German service sector ends 2025 with solid growth, PMI shows

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Final services PMI at 52.7 in December vs 53.1 in November

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Slight slowdown mainly due to easing growth in new business

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Business expectations at lowest level since April

By Miranda Murray

BERLIN, Jan 6 (Reuters) -

Germany's service sector continued to grow at a solid ?pace in December, although the rate of expansion eased for the second consecutive month due mainly ?to a slower increase in new business, a survey showed on Tuesday. The ?final HCOB Germany services PMI fell to a ?three-month low of 52.7 ?in December from 53.1 the month before, coming in just above December's preliminary reading of ?52.6 and still well clear of the ?50.0 mark that divides growth from contraction.

Growth in new business slowed despite a modest rise in international sales driven ?by stronger demand from Asia.

"The ?moderate growth ?in new business suggests that the start to the new year could be satisfactory," said Hamburg Commercial Bank chief economist Cyrus de ?la Rubia.

Employment in the services sector rose modestly for the third month in a row, with firms reducing backlogs of work at the fastest rate since last September.

The survey indicated faster increases in both input costs and output charges. Wages remained a key driver of ?rising ?costs, and companies were able to pass on some of these costs to customers.

COST CONUNDRUM 'UNLIKELY TO DISAPPEAR'

"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," said de la Rubia.

Business expectations dropped to their lowest level since last April, reflecting concerns over the competitiveness of German industry, the geopolitical situation ?and policy changes.

The slowdown in services was also reflected in the HCOB final composite PMI that tracks services as well as manufacturing, which eased to a slightly downwardly revised ?51.3 in December from November's 52.4. (Reporting by Miranda Murray; Editing by Hugh Lawson)