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The German economy is on a roll.

Businesses in Europe’s largest economy have notched up their best pace of growth since the eurozone’s debt crisis in 2011 at the start of the year, according to a closely-watched survey which revealed rising activity in the manufacturing and service sectors.

March marked another month of bumper growth in IHS Markit’s purchasing manager’s survey for Germany, defying expectations of a slight slump to hit an overall 70-month high, accelerating from 56.1 to 57. Any reading above 50 marks growth, with manufacturers driving growth, leaping from 56.8 to 58.3.

The German economy has been motoring in the last 12 months, powered by falling unemployment, low inflation, and record amounts of monetary stimulus from the European Central Bank.

Inflation however has been climbing at the start of the year, hitting 2.1 per cent last month – a four-year high on the back of surging oil and lettuce prices. That is expected to dampen consumer spending as signs of rising wage pressures remain “subdued” according to the European Central Bank.

Still, the first quarter PMI performance was the best since mid-2011 and is running well above its long-term average of 53.2, said Markit. The figures, which closely track official GDP numbers, indicate German growth accelerated at a pace of 0.7 per cent from 0.4 per cent at the start of the year.

Copyright The Financial Times Limited 2017. All rights reserved.
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