Written by Maria Martinez
BERLIN (Reuters) – Germany's private sector unexpectedly returned to growth in April, a preliminary survey showed on Tuesday, led by a solid increase in activity in the country's services sector.
The preliminary HCOB German Purchasing Managers' Index (PMI) compiled by S&P Global was 50.5 this month, up from 47.7 in March. This beat the 48.5 forecast in a Reuters poll and was the first time in 10 months that the economy was above 50, the mark of economic expansion.
The composite PMI index tracks the services and manufacturing sectors, which together account for more than two-thirds of the German economy.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: “Incorporating PMI figures into the GDP nowcast, GDP is expected to grow by 0.0% in the second quarter, following an estimated 0.1% growth in the first quarter. We expect it to expand by 2%.”
The service sector index was 53.3 this month, up from 50.1 in March, also the highest level in 10 months, and higher than the expected 50.5.
“The services sector has the potential to be a catalyst for the entire economy,” Della Rubia said.
Although manufacturing continues to contract, the rate of decline in factory production has eased and confidence among product producers has reached its highest level in a year, according to the survey.
The manufacturing PMI index rose to 42.2 from 41.9 last month, but was lower than the 42.8 expected in a Reuters poll.
The survey showed that price pressures had increased slightly at the beginning of the second quarter. Input cost and output price inflation both rose, but remained roughly in line with their respective long-term averages.
(Reporting by Maria Martinez; Editing by Christina Fincher)
