BERLIN, March 4 (Reuters) – Germany’s services sector saw business activity growth accelerate to a four-month high in February, driven by stronger demand and a rise in new business, according to a survey by S&P Global compiled before the U.S. and Israel launched attacks on Iran.
The final HCOB Germany Services PMI Business Activity Index rose to 53.5 in February from 52.4 in January, moving further above the 50.0 threshold indicating expansion in activity. It was the highest reading since last October and suggests a quicker growth rate than the long-term average.
The uptick was largely attributed to increased demand, with new business inflows rising for the fifth consecutive month. Notably, there was a significant boost in new export business, marking the strongest growth since May 2023.
Despite the positive momentum, the sector faced challenges with employment, which fell for the second month in a row. The rate of job losses was the fastest since June 2020 and the COVID-19 pandemic, as firms cited layoffs and non-replacement of leavers due to rising staff costs.
Cost pressures remained elevated, though the rate of input price inflation eased slightly from January’s peak. Firms continued to pass on some of these costs to customers, albeit at a slower rate.
“This is pretty robust growth from the service sector in February. However, companies are trying to cope with the improved business situation with fewer employees. Perhaps companies need a little more certainty before they start hiring again,” said Hamburg Commercial Bank chief economist Cyrus de la Rubia.
The German composite PMI, which includes both manufacturing and services, rose to 53.2 from 52.1 in January, indicating stronger growth across the private sector.
(Reporting by Reuters; Editing by Hugh Lawson)
