February 5, 2018 / 9:07 AM / 10 months ago

German Jan private sector growth strongest in almost seven years - PMI

BERLIN (Reuters) - Growth in Germany’s private sector hit its highest level in nearly seven years at the start of 2018, a survey showed on Monday, in a strong positive sign for Europe’s largest economy.

Markit’s final composite Purchasing Managers’ Index (PMI), which tracks the activity in manufacturing and services that together account for more than two-thirds of the economy, rose to 59.0 in January from 58.9 in December.

That was the strongest reading since April 2011 and came in slightly above the flash composite reading of 58.8.

A sub-index monitoring the services sector picked up to 57.3 in January - its strongest in nearly seven years - from 55.8 in December as new orders continued flowing in and firms ramped up recruitment.

Price pressures in the sector picked up because surging costs pushed service providers to raise their prices by the largest margin in 9-1/2 years.

Markit economist Phil Smith said the manufacturing sector

had been the driving force behind stronger German growth last year while services activity had generally expanded slowly but surely, though the January PMI survey suggested that was changing.

“What’s now needed to take growth to the next level is a more buoyant private sector services economy, which is around double the size of its manufacturing counterpart, and that’s exactly what we saw in January as growth in the former surged to its highest since early 2011,” Smith said.

Reporting by Michelle Martin; Editing by Hugh Lawson

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