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German private sector growth holds steady in March on strong services
[BERLIN] Growth in Germany's private sector was steady in March, a survey showed on Tuesday, helped by a solid upturn in the services industry that made up for a slowdown among manufacturers suffering from weak foreign demand.
Markit's flash composite Purchasing Managers' Index (PMI) , which tracks the manufacturing and services activity that accounts for more than two-thirds of the German economy, remained at 54.1, unchanged from February.
That reading was comfortably above the 50 line that separates growth from contraction, as it has been for 35 months.
But while growth in services accelerated, manufacturers saw their lowest rise in output since November 2014, with the headline figure of the sub-index dipping to 50.4 from 50.5 the previous month.
That slip was largely due to a drop in exports caused by weak demand overseas, Markit chief economist Chris Williamson said. "Maybe we'll see the foreign demand trend reverse itself and, as more stimulus comes through, we'll see the industrial sector pick up again," Williamson added, referring to the European Central Bank's ultra-loose policy stance.
He dampened expectations of a quick upturn, saying many of the underlying indicators were telling "a broader story of weakness." Overall, new business in Germany's private sector rose by the weakest rate in eight months and the rate of job creation slowed for the third month running to the weakest in almost a year.
In March, input prices plummeted by the sharpest rate since August 2009 and declined for the third month running, confronting Europe's biggest economy with "huge deflationary pressure", Williamson said.
But the rise in the composite PMI pointed to moderate growth in the first quarter. "As we didn't have a further decline this month, you're now looking at 0.3 or even 0.4 percent growth for Germany, so the prospects are a little brighter now," Williamson said.