The HCOB Germany Services PMI rose to 53.3 in January 2026, a three month high, up from 52.7 in December and above forecasts of 52.5, signalling stronger momentum in the service sector. Business activity expanded at its fastest pace since October, supported by a solid and accelerating rise in new work. Inflows of new business from abroad also increased, adding to overall demand. Firms reported improved confidence, with expectations for activity over the next 12 months becoming more optimistic. However, the labour market showed signs of deterioration, as service sector employment fell at the sharpest pace in more than five and a half years. At the same time, cost pressures intensified, with input price inflation rising to an 11 month high. Output price inflation also accelerated, pointing to more aggressive pricing behaviour among service providers.
