Berlin — Germany’s private sector grew at a slower pace in April as services shifted into a lower gear but factory activity remained high, a survey showed on Friday, suggesting Europe’s biggest economy is likely to carry its upswing into the second quarter.
Markit’s flash composite purchasing managers index (PMI), which tracks the manufacturing and services activity that accounts for more than two-thirds of the economy, fell to 56.3 from 57.1 in March, which was a 70-month high.
The April reading was a tick lower than the consensus forecast in a Reuters poll of 56.8 but still comfortably above the 50 mark that separates growth from contraction.
Growth in manufacturing remained broadly stable at 58.2 after 58.3 in March, the highest level in nearly six years.
But the survey showed business activity in the services sector accelerated less strongly than expected in April, coming in at 54.7. IHS Markit economist Trevor Balchin said this could take the edge off the economy’s performance in coming months.
"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," Balchin said.
Germany’s GDP grew by 1.9% in 2016, the strongest rate in five years, helped by a vibrant domestic economy whereas net trade was a drag to overall growth.
Strong industrial output and export figures for January and February have suggested that the economy shifted into an even higher gear in the first quarter of 2017, helped by rising global demand for cars and machines.
Economists expect Germany’s quarterly growth rate to clearly pick up in the January-March period after 0.4% in the final three months of 2016.