German economy starts 2015 with pick-up exceeding forecasts

[FRANKFURT] Germany's economy picked up momentum at the start of 2015, with demand rising for the first time in three months and employment increasing.

Markit Economics said a Purchasing Managers Index for manufacturing and services advanced to 52.6 this month from 52 in December. Economists forecast an increase to 52.4. Services led the strengthening, with an index rising to 52.7 from 52.1, while the factory gauge slipped to 51 from 51.2.

With Germany, the euro area's largest economy, only slowly getting over a weak phase, the region is struggling to shake off the effects of a recession and prevent a slide into a deflationary spiral. The European Central Bank took another step on Thursday in its fight to revive growth and inflation across the euro area, unveiling a 1.1 trillion-euro (US$1.3 trillion) plan to buy assets and boost demand.

"Germany's private sector started 2015 on a positive," said Oliver Kolodseike, an economist at Markit. "The pace of output growth picked up marginally from that seen in December, but remained well below levels seen at the beginning of last year." In a separate report, Markit said its composite index for France fell to 49.5 in January from 49.7, staying below the 50 mark that divides expansion from contraction for a ninth month. Economists had forecast an increase to 50.1. A gauge for manufacturing rose to 49.5 from 47.5 and a measure for services fell to 49.5 from 50.6.

WP