Germany's service sector remained in good health at the end of 2016, despite seeing growth of business activity ease slightly. New orders rose at a slower, yet still solid, pace amid reports of improving client demand. Outstanding business increased marginally for the second straight month, encouraging companies to raise their staffing levels further. Meanwhile, a combination of rising raw material costs (notably fuel) and greater wages led to a sharp increase in input prices. Charges rose more quickly as a result.

The final seasonally adjusted Markit Germany Services PMI Business Activity Index posted 54.3 in December, down slightly from November's 55.1 but still signalling robust growth. The latest reading marked the end of a strong final quarter, during which the sector has recovered growth momentum following a notable slowdown in September. The quarterly average (54.5) was the highest since Q1 2016. December's rise in activity was widely attributed to new business gains.