Growth in German business activity eases but remains ‘strong’

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Activity in the Germany economy slipped back slightly in April, according to a key business survey, but remained strong at close to six-year highs.

IHS Markit’s composite purchasing managers’ index figure for the eurozone’s largest economy came in at 56.3, down from last month’s post-eurozone crisis high of 57.1.

The country’s dominant manufacturing sector registered a reading of 58.2, from 58.3 in March, while the service sector figure was 54.7, from 55.6.

Economists surveyed by Bloomberg had expected all three figures to fall, though the bigger than expected dip in service sector growth meant the composite figure was below consensus forecasts of 56.8.

However, all three readings were still comfortably above the 50 level which indicates expansion, and IHS Markit said growth was still “strong”.

The PMI surveys question firms on measures such as orders, hiring and inventories to give a picture of the overall health of different sectors, and are seen as useful early indicators of economic growth.

Trevor Balchin, IHS Markit senior economist, said:

The composite output index lost a little ground from March’s 57.1 but is nonetheless above the Q1 average of 65.0, which itself was the highest of any quarter since Q2 2011.

Although manufacturing continued its run of impressive growth in April, a closer look at the latest services data suggests that overall expansion may continue to ease in the coming months. The new business index was the lowest since January and below its 2016 trend level of 53.4.

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