Germany June final services PMI 53.1 vs. 53.5 prelim

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• Final Services PMI 53.1 vs. 53.5 prelim and 54.2 prior.
• Final Composite PMI 50.4 vs. 50.6 prelim and 52.4 prior.

Key findings:

• HCOB Germany Services PMI Business Activity Index at 53.1 (May: 54.2). 3-month low.
• HCOB Germany Composite PMI Output Index at 50.4 (May: 52.4). 3-month low.
• Cost inflation lowest since March 2021.

Comment:

Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“The services sector is keeping Germany’s economy afloat. Despite a slight loss in momentum, activity in services continues
to expand at a solid rate. New business is coming in steadily, and companies are still hiring, albeit more cautiously than in
May.”

“It’s a bit worrisome that outstanding business has come down after having stayed more or less constant over the last two
months. We are inclined not to over-interpret this figure as the slowing down of consumer price inflation and higher wage
agreements are supporting the purchasing power of the people.”

In addition, the European Football Championship, which
already provided positive effects according to some respondents, will reach its “hot phase” in July. In this context, new
export business, which includes tourism, is trending up since May. Thus, we are optimistic that growth in the service sector
will be maintained.”

“While the European Football Championship likely supported activity last month, it may also explain why respondents are
less optimistic about activity in June 2025, anticipating the absence of such a significant event. Despite this, the majority of
respondents remain optimistic about activity levels a year from now.”

“On the price front, input costs, including wages, are still rising faster than the long-term average, but there’s been a slowing
trend over the past four months. This could suggest that wages and salaries, which official data showed grew at a rate of
6.3% in the first quarter, will see a much lower rate of increase in the second quarter.”

The ECB would certainly welcome this,
as it could open the door for new rate cuts. However, the ECB will also keep an eye on the prices charged in the eurozone’s
largest economy. These have picked up pace again, sending a note of caution to the central bankers. This fits to our view
that a rate cut will only happen in September.”