Upturn in German services activity slows in June, PMI shows

BERLIN (Reuters) - A solid rise in business activity in June ended a positive second quarter for the German service sector, albeit with the rate of expansion easing slightly, a survey showed on Wednesday.

The HCOB final services Purchasing Managers' Index eased to 53.1 in June from to 54.2 in May, slightly below a preliminary flash estimate of 53.5 but above the 50.0 mark that separates growth from contraction for a fourth straight month.

Growth in new business and employment also slowed, while firms' expectations for the coming year slipped to a five-month low, the survey showed.

"The services sector is keeping Germany's economy afloat," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. "Despite a slight loss in momentum, activity in services continues to expand at a solid rate."

Firms that reported a rise in activity in June attributed this to a range of factors, including greater marketing and sales efforts, lower interest rates, the European Football Championships and generally stronger underlying demand.

"While the European Football Championship likely supported activity last month, it may also explain why respondents are less optimistic about activity in June 2025, anticipating the absence of such a significant event," de la Rubia said.

Business costs across the service sector rose at the slowest rate since March 2021, although wage pressures meant cost pressures were still elevated by historical standards.

The composite PMI index, which comprises services and manufacturing, fell to 50.4 in June from May's one-year high of 52.4.

(Reporting by Maria Martinez; Editing by Christina Fincher)