German Services Activity Shrinks Again in May
The final HCOB Germany Services PMI rose to 48.1 in May from 46.9 in April but remained below the 50.0 growth threshold. High energy costs and geopolitical uncertainty continue to stifle spending power, though business expectations for the coming year have rebounded to their highest level since February.
Germany services activity contracted for a second consecutive month in May as high energy costs and Middle East instability stifled demand. The final HCOB services PMI rose to 48.1 from 46.9 in April, remaining below the 50.0 threshold that separates growth from contraction. The result followed a squeeze on spending power and heightened levels of uncertainty across the economy.
### Energy Costs and Geopolitics Stifle Demand Subdued demand and elevated energy prices linked to the Middle East conflict weighed on activity throughout May. While the index rose slightly above the preliminary reading of 47.8, it marks the first time in nearly a year that the sector has shrunk for two months in a row.
