Germany's private sector picked up more steam in September, and the surprise came from services. S&P Global's composite PMI moved up to 53.8 from 51.8 in August, a near one-year high last seen in October 2025. Readings above 50 indicate expansion. Economists surveyed by Bloomberg had expected no change, so this was a beat.
Services snapped back to 52.9, defying predictions for another dip below 50, while manufacturing eased slightly to 53.8. Phil Smith, an economist at S&P Global Market Intelligence, said Wednesday, "The flash data pointed to the strongest rise in business activity for almost a year, with the service sector finally re-joining manufacturing in growth territory." He added that companies are again showing resilience, "with output growth picking up speed, expectations towards the outlook holding steady and employment rising for a second month running, all despite renewed pressure on the inflation front."
Earlier gains in German government bonds faded, and 10-year yields ended at 3.46%, down one basis point after being three lower at the start of the session.
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Europe's largest economy is trying to claw back from years of underperformance. Low river levels during summer heat waves weighed on output this quarter, but the Bundesbank expects activity to improve toward year-end. Headwinds remain, including faster inflation and higher interest rates tied to the Iran war, along with the possibility that reforms are watered down after gains by far-right and far-left parties in regional contests. On the support side, big-ticket government spending on the military and infrastructure is ramping up and set to bolster growth.
PMIs drop early each month and are handy for spotting where the economy is turning. They measure how widespread changes are, not how deep, so they do not always map neatly to quarterly GDP. Even so, services rejoining manufacturing in growth hints that Germany's recovery is broadening, a shift that can ripple into earnings and currency trends that everyday investors watch.
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