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Germany's PMI Signals Turnaround In Private Sector

Following a record downturn, Germany's private sector showed signs of a turnaround in June, flash data from IHS Markit showed Tuesday.

The flash composite output index climbed to 45.8 in June from 32.3 in the previous month. This was the highest reading in four months and above economists' forecast of 44.2.

The survey highlighted the effects of easing lockdown restrictions and also an improvement in business confidence. There were identical rates of decline in services business activity and manufacturing production.

The manufacturing Purchasing Managers' Index advanced to 44.6 from 36.6 a month ago. The expected level was 41.5.

At the same time, the services PMI came in at 45.8 versus 32.6 in the previous month and well above forecast of 42.0.

"However, while the loosening of lockdown restrictions has had a positive effect on some parts of the economy, the PMI's latest reading is still within contraction territory, which shows this is likely to be a protracted recovery as coronavirus-related disruption and uncertainty continue to weigh on demand," Phil Smith, principal economist at IHS Markit said.

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