Germany's private sector expands less than expected in April

[BERLIN] Growth in Germany's private sector slowed slightly in April, a survey showed on Thursday, suggesting that the government's cautious growth forecast for Europe's largest economy might prove justified.

Markit's flash composite Purchasing Managers' Index (PMI), which tracks manufacturing and services activity accounting for more than two-thirds of the economy, fell to 54.2 from March's eight-month high of 55.4.

However, that was still comfortably above the 50 mark dividing growth from contraction for a 24th consecutive month.

"Growth had been really quite impressive in many respects at the end of the first quarter and we cooled a bit from that," Markit economist Chris Williamson said, adding that hiring still remained resilient which was an encouraging sign.

The sub-index for the manufacturing sector unexpectedly dropped to 51.9 from 52.8 in March, undershooting a Reuters poll consensus of 53.0.

The sub-index for services also unexpectedly fell with a lower reading of 54.4 after 55.4 last month. The polled analysts had expected a broadly steady 55.5.

On Wednesday, Berlin raised its economic growth forecasts to 1.8 per cent for this year and next as Germany rides high on a tide of strong private consumption thanks to rising employment, bigger paychecks and cheap oil.

However, the government - which said it was being deliberately cautious - is not as optimistic about growth in 2015 as leading economic institutes which last week almost doubled their growth forecast for this year to 2.1 per cent.

"If we get another weak month in May then we should see their consensus come down more towards that government growth figure," Mr Williamson said.

REUTERS