3 weeks ago
Economic Indicators

Services Rescue German Private Sector Activity in February

Investing.com - German private-sector activity picked up in February, according to data released on Thursday, as buoyant services compensated for

Investing.com - German private-sector activity picked up in February, according to data released on Thursday, as buoyant services compensated for a sharp contraction in the manufacturing sector, traditionally the euro-zone economy's most powerful growth engine.

The preliminary reading of the IHS Markit composite output index, which measures the combined output of both the manufacturing and service sectors, advanced to a four-month high of 52.7 from 52.1, ahead of expectations for 52.0.

The services PMI rose to a five-month peak of 55.1, ahead of expectations for 52.9 and up from 53.0 a month earlier.

However, the manufacturing PMI fell to its lowest in more than six years at 47.6, from 49.7 in January. Economists had expected a reading of 50.0, the level that notionally separates expansion from contraction.

“Germany’s manufacturing and service sectors remain on very different paths," said Phil Smith, Principal Economist at IHS Markit. "While strong fundamentals in the domestic market are driving growth in services business activity, falling exports continue to weigh on the performance of the manufacturing sector," he added.

The data come after the German economy stagnated in the fourth quarter, after contracting in the three months through September.

In its latest monthly report, Germany’s central bank, the Deutsche Bundesbank, said that recent weak readings in factory orders and a decline in business confidence suggested little hope of an immediate rebound for the euro area’s largest economy.

It predicted that the “underlying pace of the economy should remain subdued at least in the first half of the year”, although it said “there are no signs that the slowdown is becoming an outright downturn.”