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German economy grows at fastest rate for six months in February -PMI – Metro US

German economy grows at fastest rate for six months in February -PMI

FILE PHOTO: Workers assemble a camper at the Knaus-Tabbert AG
FILE PHOTO: Workers assemble a camper at the Knaus-Tabbert AG factory in Jandelsbrunn

BERLIN (Reuters) – Improving demand for services pushed business activity across Germany’s private sector to a six-month high in February, and while manufacturing lagged due to COVID-19 infections among staff the sector also showed signs of recovery, a survey showed on Monday.

IHS Markit’s flash services Purchasing Managers’ Index (PMI) rose to 56.6 in February, up from 52.2 last month and the highest reading since August.

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

On the other hand, the flash manufacturing PMI dropped to 58.5 from 59.8, below analyst forecasts for a reading of 59.5, as staff absences due to COVID-19 infections offset strong order growth and easing supply chain bottlenecks.

The results showcased the resilience of the German economy, whose recovery from the pandemic was held back last year by supply shortages and fears that the Omicron variant could result in crippling lockdowns.

“The German economy continued to regain momentum in February following December’s brief stagnation in output growth,” said Phil Smith, Economics Associate Director at IHS Markit, adding there were also positive signs from the manufacturing sector.

“Although goods production rose at a softer pace, data on new orders showed the fastest rise in six months. Moreover, supply chain pressures appeared to ease further as average lead times lengthened to the least extent since Nov. 2020,” he said.

At the same time, strong price pressures remained an issue with input prices rising at a similar rate as at the turn of the year and prices charged for goods and services increasing at the second-fastest rate on record, Smith said.

(Reporting by Zuzanna Szymanska; Editing by Toby Chopra)

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