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German private sector expands at slowest pace this year in May: PMI

[BERLIN] Germany's private sector expanded at its slowest rate this year in May, a survey showed on Wednesday, as new orders failed to flow in as fast, pointing to steady if unspectacular growth for Europe's biggest economy.

Markit's final composite Purchasing Managers' Index, which tracks activity in the manufacturing and services sectors that account for more than two-thirds of the economy, stood at 52.6 in May, down from 54.1 in April.

That was still above the 50 mark that separates growth from contraction, but slightly below a preliminary estimate of 52.8.

Companies raised prices at the fastest rate since January 2014, in a positive sign as the euro zone fights to avert deflation, although their input costs rose at the fastest rate since October 2012.

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The services sector PMI fell to 53.0 in May from 54.0 a month earlier, also the weakest rate of growth so far in 2015, but a touch above the flash estimate of 52.9.

"Germany's service sector shifted down a gear in May," Markit economist Oliver Kolodseike said in a statement, adding that an easing in new business could be traced to decreases in new work at transport and storage businesses.

Service providers remained optimistic, although sentiment was at its weakest level so far this year.

On a brighter note, companies added to their headcount at a faster rate than in April. Kolodseike said this gave businesses more capacity to take on bigger workloads in coming months.