German private sector growth slows

The HCOB Flash Germany Composite PMI fell to 52.1 in November 2025, down from 53.9 in October—which had marked the strongest reading since May 2023—and below market expectations of 53.7.

Although the headline figure still indicates expansion, the loss of momentum underscores the growing fragility in Europe’s largest economy.

The downturn was driven by a deeper contraction in manufacturing, where the PMI slipped to 48.4 from 49.6, hitting a six-month low. Persistent weakness in factory output and ongoing softness in domestic and foreign demand continued to weigh on the sector. At the same time, services activity expanded at a slower pace, with the PMI easing to 52.7 from 54.6, signaling that the post-summer rebound in the service economy is losing steam.

Across the private sector, firms reported slower increases in both business activity and new orders, pointing to a cooling pipeline of work. Employment also declined at a faster rate as companies responded to a renewed drop in backlogs, suggesting excess capacity and caution around future workloads.

Price indicators offered mixed signals. While output price inflation eased from October’s eight-month high, indicating some moderation in pricing power, overall input cost inflation remained unchanged, reflecting continued pressure from wages and certain material costs.

Looking ahead, firms’ expectations for the coming year were broadly stable, though sentiment remained uneven. Manufacturers showed slightly stronger optimism, supported by hopes of gradual improvements in global demand and supply-chain conditions.

However, this was largely offset by a softening outlook in the services sector, where concerns over consumer spending and economic uncertainty persisted.

Overall, the latest PMI data suggest that Germany’s recovery remains fragile and uneven, with the economy still vulnerable to external shocks and domestic demand challenges.