Germany’s humming factories outpace services in May, PMIs show

FILE PHOTO: A steel worker stands at a furnace at the plant of German steel company Salzgitter AG in Salzgitter

BERLIN (Reuters) – Germany’s services remained in solid shape in May while humming factory activity propelled overall private sector growth to a six-year-high, a survey showed on Monday, another sign that a robust upswing in Europe’s biggest economy is set to continue.

Markit’s composite Purchasing Managers’ Index (PMI), which tracks the manufacturing and services that account for more than two-thirds of the economy, rose to 57.4 from 56.7 in April.

The reading, a 73-month high, was well above the 50 line that separates growth from contraction and came in a tick better than a preliminary estimate of 57.3.

The main support came from manufacturers, whose growth accelerated at the fastest pace in over six years, helped by

increased demand from both domestic and foreign clients, especially in Asia.

In services, business activity remained stable, with the final PMI reading for May at 55.4, unchanged from April and

slightly better than the flash reading published last month.

IHS Markit economist Trevor Balchin said demand from abroad for German manufacturing rose at the fastest rate in seven years in May, a sign that exports will continue to propel overall economic growth in the second quarter.

The German economy grew by 1.9 percent in 2016, the strongest rate in half a decade, helped by soaring private

consumption, higher state spending and increased construction.

In the first quarter of 2017, the economy picked up further speed as exports also helped to drive growth, pushing up

Germany’s quarterly growth rate to 0.6 percent from 0.4 percent in the fourth quarter of 2016.

(Reporting by Michael Nienaber,editing by Larry King)