German private sector gathers steam, points to modest Q2 growth: PMI

[BERLIN] Germany's private sector gained traction in June as growth improved in both factories and service providers, suggesting Europe's largest economy expanded in the second quarter after growing modestly in the first.

Markit's final composite Purchasing Managers' Index, which tracks activity in the manufacturing and services sectors that together account for more than two-thirds of the economy, climbed to 53.7 in June from 52.6 in May.

That was comfortably above the 50 line that divides expansion from contraction for a 26th month running but was slightly below a preliminary estimate of 54.0.

"Looking at the composite data, it appears that the pick-up in output growth is broad-based, with both manufacturers and service providers reporting stronger increases," said Oliver Kolodseike, economist at Markit.

"The data furthermore point to another quarter of modest GDP growth in Germany."

German economic growth slowed to 0.3 per cent in the first quarter, but many economists expect it to grow faster in the April-June period. The latest data show orders, output and exports have risen.

Services reported more new work than they had in May, but the rate of increase was the weakest this year, so some companies resorted to tackling backlogs of work.

Nonetheless, they took on new recruits for a 20th month running as they expected fuller order books in future.

Service providers became more upbeat about their future prospects as they attracted new clients, beefed up their sales teams and noted an improvement in the economic backdrop.

Services faced higher input costs, partly due to rising personnel and fuel prices, so some businesses raised their selling prices.

REUTERS