German economy grows at fastest pace for six months in February – PMI


Workers assemble a motorhome at the Knaus-Tabbert AG factory in Jandelsbrunn near Passau, Germany, March 16, 2021. REUTERS/Andreas Gebert

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BERLIN, Feb 21 (Reuters) – Improving demand for services pushed business activity in Germany’s private sector to its highest level in six months in February, and while manufacturing lagged due to infections to COVID-19 among staff, the sector has also shown signs of recovery, according to a survey shown on Monday.

IHS Markit’s Flash Services Purchasing Managers’ Index (PMI) rose to 56.6 in February from 52.2 last month and the highest level since August.

As a result, the composite PMI, which tracks the manufacturing and services sectors which together make up more than two-thirds of the German economy, also hit a six-month high of 56.2, from 53.8 in January.

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Elsewhere, the flash manufacturing PMI fell to 58.5 from 59.8, below analysts’ forecast for a reading of 59.5, as staff absences due to COVID-19 infections offset the sharp order growth and alleviated supply chain bottlenecks.

The results highlighted the resilience of the German economy, whose recovery from the pandemic was hampered last year by supply shortages and fears that the Omicron variant could lead to crippling lockdowns.

“The German economy continued to regain momentum in February after the brief stagnation in output growth in December,” said Phil Smith, associate director of economics at IHS Markit, adding that there were also positive signs from the manufacturing sector.

“Although goods production grew at a slower pace, new orders data showed the fastest rise in six months. Additionally, supply chain pressures appear to have eased further as that average lead times have lengthened to the least extent since November 2020,” he said.

At the same time, severe pricing pressures remained an issue, with input prices rising at a similar rate to the start of the year and prices charged for goods and services rising at the second fastest rate ever. registered, Smith said.

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Reporting by Zuzanna Szymanska; Editing by Toby Chopra

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