05.08.202608:10:47UTC+00German Service Sector Nears Stabilization

Germany’s Services PMI rose to 49.8 in July 2026 from 48.6 in June, revised up from the preliminary estimate of 49.6. Although still below the 50.0 threshold that separates contraction from expansion, the latest reading signals that the sector is moving closer to stabilization, with activity contracting at its slowest pace since the downturn began in April.

New business increased marginally for the first time in five months, supported by a higher number of customers, even as foreign demand continued to weaken. Output remained constrained by elevated prices and ongoing geopolitical uncertainty. Employment declined for a seventh consecutive month, but the rate of job shedding was the slowest in the current sequence. Backlogs of work also continued to fall, though at the weakest rate since March.

Meanwhile, both input cost and output price inflation accelerated, driven by higher fuel costs following the expiry of the temporary fuel tax cut and sustained wage pressures. Business confidence strengthened further from April’s recent low, as firms became more optimistic about activity over the coming year.