German HCOB Services PMI Final (Jan) 52.4 vs. Exp. 53.3 (Prev. 52.7)

• "Continued growth in the service sector can be expected in the coming months, as new business has increased for the fourth month in a row. For the first time since mid-2023, orders from abroad are playing an important role in supporting growth. In general, the mood in the service sector appears to be relatively good."
• “Service providers clearly feel able to charge higher prices for their services, which is a sign of strength. This observation supports the theory that the economy is on the upswing, as higher prices can usually be best enforced during an economic upturn. Although part of the increase in sales prices is also due to higher cost inflation, the jump in inflation in sales prices is greater than that of costs."

The final reading of Germany's HCOB Services PMI for January came in below expectations, indicating the sector is growing, but at a slower pace than anticipated. Despite the miss, the underlying trends suggest a resilient service sector with increasing new business and upward pressure on prices, hinting at potential economic strengthening. This mixed signal may influence market views on future ECB policy, particularly regarding inflation dynamics and growth outlook.