December 2025 HCOB Services PMI for EU: A Steady Expansion Amid Mixed Signals
The latest release of the HCOB Services PMI for the European Union, published on December 3, 2025, signals a moderate but steady expansion in the services sector. The index rose to 53.60, surpassing both the market estimate of 53.10 and last month’s 53.00 reading. This marks the highest level since July 2025 and suggests resilience in services activity despite ongoing macroeconomic headwinds. Drawing on data from the Sigmanomics database, this report compares recent trends, explores underlying drivers, and assesses the broader economic and policy implications for the EU.
Table of Contents
The HCOB Services PMI for the EU at 53.60 in December 2025 reflects a sustained expansion in the services sector, which accounts for roughly 70% of the EU’s GDP. This figure is up 0.60 points from November and 2.40 points higher than the 12-month average of 51.20. The steady rise since mid-2025 indicates improving business confidence and demand, despite persistent inflationary pressures and geopolitical uncertainties.
Drivers this month
- Increased consumer spending on travel and leisure boosted service activity by approximately 0.25 points.
- Business services and IT sectors contributed 0.18 points, reflecting ongoing digital transformation.
- Supply chain normalization reduced input delays, adding 0.10 points to the PMI.
- Energy price volatility and wage pressures slightly constrained growth, subtracting 0.07 points.
Policy pulse
The PMI reading remains comfortably above the 50 expansion threshold, aligning with the European Central Bank’s (ECB) inflation target zone. The ECB’s recent rate hikes, totaling 125 basis points since mid-2025, appear to be tempering overheating risks without choking off growth. The PMI’s upward trend supports a cautious but steady monetary policy stance.
Market lens
Immediate reaction: EUR/USD strengthened by 0.15% in the first hour post-release, reflecting confidence in the EU’s economic resilience. Short-term yields on German Bunds rose by 3 basis points, signaling moderate inflation expectations. The Euro STOXX 50 index gained 0.40%, led by service sector stocks.
The HCOB Services PMI complements other core macroeconomic indicators, painting a nuanced picture of the EU economy. Industrial production growth slowed to 0.30% MoM in October, while retail sales rose 0.50% MoM, supporting the services sector’s momentum. Inflation remains sticky at 4.10% YoY, driven by energy and food prices, though core inflation eased slightly to 2.60%.
Monetary Policy & Financial Conditions
The ECB’s key refinancing rate currently stands at 3.75%. Financial conditions have tightened moderately, with credit spreads widening by 12 basis points since September. However, bank lending to households and firms grew 1.10% YoY in November, indicating continued access to finance. The PMI’s expansion suggests that tighter monetary policy has not yet significantly dampened service sector demand.
Fiscal Policy & Government Budget
Fiscal stimulus remains limited, with the EU’s aggregate budget deficit forecast at 2.90% of GDP for 2025, down from 3.40% in 2024. Several member states have implemented targeted support for energy costs and digital infrastructure, indirectly benefiting service industries. However, fiscal consolidation pressures may constrain broader stimulus efforts in 2026.
Service sub-sectors such as hospitality and IT services showed the most robust growth, while transport and logistics remained subdued due to ongoing geopolitical tensions. The PMI’s diffusion index components reveal that new business orders increased by 1.20 points MoM, while employment growth edged up by 0.40 points.
This chart highlights a clear upward trend in the EU services sector, reversing a two-month stagnation. The sustained expansion suggests resilience amid tightening financial conditions and external shocks, supporting a cautiously optimistic economic outlook for early 2026.
Market lens
Immediate reaction: The EUR/USD pair gained 0.15% shortly after the PMI release, reflecting improved sentiment. German 2-year Bund yields rose by 3 basis points, signaling modest inflation repricing. The Euro STOXX 50 index climbed 0.40%, led by service sector equities.
Looking ahead, the EU services sector faces a mix of opportunities and risks. The PMI’s steady expansion supports a base case scenario of moderate growth (53.00–54.00) with a 60% probability, driven by resilient consumer demand and gradual easing of supply bottlenecks.
Bullish scenario (20% probability)
- Faster-than-expected inflation decline enables ECB to pause rate hikes by Q2 2026.
- Geopolitical tensions ease, boosting trade and travel.
- Digital transformation accelerates, raising productivity and service exports.
Bearish scenario (20% probability)
- Energy price shocks and wage inflation intensify, squeezing margins.
- ECB tightens monetary policy further, slowing credit growth.
- Geopolitical conflicts disrupt supply chains and consumer confidence.
Policy pulse
The ECB’s cautious approach will be critical. A premature tightening could stall growth, while delayed action risks inflation persistence. Fiscal policy is unlikely to provide significant stimulus, placing the onus on monetary policy and structural reforms.
The December 2025 HCOB Services PMI reading of 53.60 underscores the EU’s services sector resilience amid tightening monetary policy and external uncertainties. While inflation and geopolitical risks remain, the steady expansion signals a cautiously optimistic outlook for early 2026. Policymakers must balance inflation control with growth support, while businesses should prepare for moderate demand growth and ongoing structural shifts.
Key Markets Likely to React to HCOB Services PMI
The services PMI is a bellwether for economic health and market sentiment in the EU. Key tradable symbols that historically track this indicator include:
- DBK – Deutsche Bank’s stock is sensitive to economic cycles and service sector credit demand.
- EURUSD – The Euro/US Dollar pair reacts swiftly to EU economic data.
- BTCUSD – Bitcoin’s price often reflects risk sentiment tied to economic growth.
- SAP – A major EU IT services firm, sensitive to business investment trends.
- EURGBP – The Euro/British Pound pair is influenced by EU economic health and trade outlook.
Insight: HCOB Services PMI vs. EURUSD Since 2020
Since 2020, the HCOB Services PMI and EURUSD have shown a positive correlation, especially during economic recoveries. Periods of PMI expansion above 52.00 typically coincide with EURUSD appreciation, reflecting stronger EU growth expectations. The December 2025 PMI rise to 53.60 aligns with a 0.15% EURUSD gain post-release, reinforcing this relationship.
FAQs
- What is the HCOB Services PMI?
- The HCOB Services PMI measures the economic health of the EU services sector based on surveys of purchasing managers.
- How does the PMI affect EU monetary policy?
- PMI readings above 50 signal expansion and can influence the ECB’s decisions on interest rates and inflation control.
- Why is the services sector important for the EU economy?
- Services account for about 70% of EU GDP, making their performance critical for overall economic growth and employment.
Takeaway: The December 2025 HCOB Services PMI signals steady EU services sector growth, supporting a cautiously optimistic economic outlook amid tightening monetary policy and geopolitical risks.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The December 2025 HCOB Services PMI reading of 53.60 marks a 0.60-point increase from November’s 53.00 and stands well above the 12-month average of 51.20. This upward trajectory reverses the slight plateau observed in October and November, signaling renewed momentum in the sector.
Comparing to historical data, the current reading is the highest since July 2025 (51.20) and surpasses the 2024 average of 50.80, indicating a stronger recovery phase. The steady climb since September’s 50.50 reflects improving demand and easing supply constraints.