German Services Sector Contracts at Fastest Pace Since 2022
German services PMI fell to 46.9 in April as the Iran war and inflation hit demand. This is the sharpest drop since 2022 and signals economic contraction.
Germany service sector activity fell to 46.9 in April, marking the sharpest contraction in over three years. The reading dropped from 50.9 in March as inflationary pressures and geopolitical uncertainty tied to Iran stifled domestic demand. This downturn signals a heightened risk of a broader economic contraction for the eurozone's largest economy during the second quarter.
### Geopolitical Tension Erodes Service Demand The final HCOB Germany Services Purchasing Managers Index, compiled by S&P GLOBAL INC, matched preliminary estimates but fell below the 50.0 growth threshold for the first time since August 2025. New business volumes declined for a second consecutive month, hitting their lowest point since January 2024. S&P Global economics associate director Phil Smith noted that while manufacturing has been buffered by stockbuilding, services are feeling the immediate impact of regional conflict.
