Germany’s economy maintained strong growth momentum at the start of 2018 thanks to the fastest rise in service sector business activity for nearly seven years, according to January’s flash PMI survey from IHS Markit.
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Growth in the manufacturing sector was meanwhile below the record level seen at the end of 2017 but still among the highest seen over the past two decades.
The IHS Markit Flash Germany Composite Output Index registered a reading of 58.8 in January, little-changed from December’s 80-month high of 58.9, with the quickest growth of services businesses activity since March 2011 offsetting a slower, but still-strong, increase in goods production.
The softer pace of expansion in manufacturing output was reflected in the IHS Markit Flash Germany Manufacturing PMI dipping from a record high of 63.3 in December to 61.2.
Although the lowest for three months, the latest reading still pointed to an overall rate of growth that was faster than at any other time in the past six-and-a-half years.
Job creation in the private sector economy meanwhile gathered pace to reach the fastest seen IHS Markit Germany Flash PMI since early-2011.
There were marked increases in employment across both manufacturing and services, with the latter seeing staffing levels rise to the greatest extent for ten months.
Underpinning the latest increases in output and employment was further, albeit slower, growth in the inflow of new business at German firms.
January’s rise in new orders was the least marked since August last year, but still strong compared with that seen on average since data collection began 20 years ago.
Rates of increase moderated in both monitored sectors, which in the case of manufacturing partly reflected weaker growth of new export orders – the slowest seen for six months.
Backlogs of work continued to accumulate across the private sector economy during the opening month of the year, in line with the trend seen in every month since mid-2016.
Capacity pressures were most prevalent in the manufacturing sector, where the level of work-in-hand rose sharply and suppliers’ delivery times showed the secondgreatest increase (on average) in the series history. ■