BERLIN May 4 Growth in Germany's services sector fell slightly but remained strong in April, a survey showed on Thursday, suggesting Europe's largest economy will post healthy growth in the first quarter.
Markit's final services Purchasing Managers' Index (PMI) fell to a two-month low of 55.4 from 55.6 in March but beat a flash estimate and remained well above the 50.0 mark that separates growth from contraction.
The final composite Purchasing Managers' Index (PMI), which tracks activity in manufacturing and services that together account for more than two-thirds of the German economy, slipped to 56.7 from March's 70-month high of 57.1.
Markit's final PMI for manufacturing on Tuesday showed growth in the sector held near a six-year high at the start of the second quarter. (Full Story)
The survey compiler said the figures suggest German economic growth will remain strong in the second quarter and it expects output to accelerate to 0.7 percent in the first quarter.
Markit economist Trevor Balchin said details of the services sector PMI suggest the German growth outlook should be treated with a degree of caution, however.
"New business growth slowed to a three-month low, outstanding business declined and expectations for activity moderated," he wrote. "Cost pressures remained strong in April, although the rate of input price inflation eased for the first time since August 2016.
"This reflected the trend in the service sector economy, while manufacturing purchase price inflation accelerated for the ninth month in a row to the highest since May 2011," Balchin added.
As growth of new business moderated, service providers were able to clear their backlogs, which fell for the first time since January, although at a moderate pace.
Improving demand and increased staffing kept business sentiment in positive territory as service providers anticipate growth over the next 12 months, although the overall strength of expectations eased to a three-month low.
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(Reporting by Joseph Nasr; Editing by Catherine Evans; ((firstname.lastname@example.org; +49 30 2888 5085; Reuters; Messaging: email@example.com)))