BERLIN (Reuters) -Business activity in Germany, Europe’s largest economy, grew at an accelerated pace in September, hitting its fastest pace in 16 months due mainly to a rebound in the services sector, a survey showed on Tuesday.
The HCOB German flash composite Purchasing Managers’ Index, compiled by S&P Global, rose to 52.4 in September from 50.5 in August, surpassing analysts’ expectations of 50.6.
September marks the fourth month in a row that the composite index, which tracks the services and manufacturing sectors that together account for more than two-thirds of the euro zone’s largest economy, was above the 50 mark indicating growth.
The September rise was driven mainly by a notable recovery in the services sector, with the corresponding index climbing to 52.5 from 49.3 in August, marking an eight-month high.
However, the manufacturing sector showed signs of strain, with its index slipping to 48.5 from 49.8, a four-month low.
The survey also highlighted that new work inflows were down in both sectors, indicating fragile demand.
“Trouble seems to be brewing in manufacturing,” said Hamburg Commercial Bank chief economist Cyrus de la Rubia.
“If demand, both at home and abroad, keeps dropping, it won’t be long before firms hit the brakes on production, too.”
Inflationary pressures have increased, with input costs and output charges rising at their fastest rates in several months, particularly in the services sector.
While the overall economy is growing, de la Rubia cautioned against complacency, noting that “orders are under pressure, especially in manufacturing but also in services, signalling another slowdown could be on the horizon.”
Business expectations for the year ahead have softened, he noted, reflecting concerns over a sluggish economy and elevated operating costs.
(Reporting by Miranda Murray; Editing by Hugh Lawson)
