The German service sector may prevent the economy from contracting in the fourth quarter, but the growth momentum has already slowed.

Chief economist Cyrus de la Rubia of Hamburg Commercial Bank stated that the service industry may barely maintain economic growth above zero in the fourth quarter in Germany. However, the growth momentum in this sector has slowed down in November. One possible reason is that the consumer-sensitive service industry is being impacted by cautious spending behavior from households. Additionally, the PMI indicates that the manufacturing downturn deepened in November, affecting industrial-related service enterprises, which is also unfavorable for the overall economy. However, on the other hand, this also demonstrates the relative resilience of service enterprises when facing challenging environments. In terms of prices, the good news is that cost inflation pressure on service enterprises has slightly eased. However, companies are evidently forced to pass on the lower inflation pressure to customers because the increase in sales prices has also slowed down. This indicates that companies have failed to improve profit margins.