The HCOB Germany Services PMI rose to 54.6 in October 2025 from 51.5 in September, the highest reading since May 2023 and above market preliminary estimates of 54.5. Germany’s services sector strengthened sharply at the start of Q4, driven by stronger domestic demand and a rise in new business. Employment grew for the first time in three months after steep declines in September, as firms responded to higher workloads and growing backlogs, which increased for the first time since mid-2022. Export demand remained weak but showed signs of stabilizing, with the smallest fall since mid-2024. Inflationary pressures, however, picked up again, as higher wages pushed input costs to their highest since April, while service providers raised their selling prices at the fastest rate in eight months. Despite a slight dip in optimism, sentiment remained upbeat, supported by expectations of improving economic conditions, new product development, and investment in technology.