German Private Sector Growth At 31-Month High

Germany's private sector expanded at the fastest pace in over two-and-a-half years in December, survey data from Markit Economics showed Thursday.

The flash composite output index rose to 55.9 in January from 55 in December. The reading above 50 indicates expansion in the private sector.

The Purchasing Managers' Index for manufacturing climbed more-than-expected to 56.3, a 32-month high, from 54.3 in December. The expected level was 54.6.

Meanwhile, the index for services rose less-than-expected to 53.6 from 53.5 in the previous month. Economists were forecasting the index to rise to 54.

The acceleration of output growth largely reflected increased production at manufacturers, with the rate of output growth the sharpest since April 2011. Service providers also reported activity growth, extending the current sequence of expansion to eight months.

January data signaled rising inflows of new business at German private sector firms. Despite accelerated output and new order growth, the latest rate of job creation eased to the weakest in three months and was only marginal overall.

Further, the survey revealed that cost pressures in Germany's private sector persisted, although the rate of inflation slowed to a four-month low.

"With workforce numbers increasing for a third month in succession, levels of unfinished work rising further and new business increasing markedly, the German private sector seems set to maintain its growth momentum in the coming months," said Oliver Kolodseike, economist at Markit.

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