Germany’s private sector delivered its strongest performance in over a year this September, offering encouraging signs that Europe’s largest economy is regaining momentum after months of sluggish growth.
The HCOB Flash Germany Composite PMI, compiled by S&P Global, rose to 52.4 in September 2025, up from 50.5 in August and the highest level since May 2024. The figure surpassed expectations of 50.7, cementing a second straight month of expansion above the 50-point threshold.
Services Sector Powers Growth
The rebound was led by a sharp improvement in services, where activity rose significantly as companies benefitted from stabilising demand. The services PMI surged to 52.5 from 49.3, marking a clear turnaround from contraction to expansion.
While manufacturing remained in decline, with its PMI slipping to 48.5 from 49.8, output continued to grow for a seventh consecutive month. This suggests that factories are still contributing positively, even as new orders remain under pressure.
Cyrus de la Rubia, chief economist at HCOB, noted that the latest figures “show a private sector that is resilient, with services driving momentum.” He added that ongoing investment initiatives by the government could strengthen confidence further in the coming months.
Economy Shows Resilience Despite Challenges
Germany’s economy contracted by 0.3% in the second quarter of 2025, but recent data points to a modest recovery. The Bundesbank expects GDP to edge higher in the third quarter, supported by improved trade conditions.
A tariff agreement between the European Union and U.S. President Donald Trump earlier this year has also reduced uncertainty, helping business sentiment improve steadily over the past five months.
Although employment levels dipped slightly in September and inflationary pressures ticked higher, economists view the overall trajectory as stabilising rather than weakening.
Global Economic Pulse
Germany’s rebound comes at a time when other major economies are also reporting solid PMI readings. India and Australia continued to record robust activity in September, highlighting resilient global demand despite challenges in trade and energy markets. Upcoming PMI releases from the UK and U.S. are expected to provide further clarity on global momentum.
Outlook: cautiously optimistic
The September PMI highlights the services sector’s vital role in offsetting manufacturing pressures and keeping Germany’s economy on a growth path. Analysts believe that with investment projects in the pipeline and global trade tensions easing, Germany could gradually build on this fragile but positive momentum.
The data offers a hopeful signal: while challenges remain, Germany is showing that recovery is possible with the right mix of domestic resilience and international stability.
