A rise in output helped German manufacturing activity expand in February at its fastest rate since June 2007, pointing to a healthy resumption of growth in Europe's largest economy, a survey showed today.
A flash estimate of the Markit composite purchasing managers' index (PMI), which surveys the manufacturing and services sectors, rose to 55.4 from 54.6 in January, with activity expanding at its quickest pace since August 2007.
A reading of 50 marks the threshold separating growth from contraction.
Manufacturing output, which grew at its fastest rate in three years, far outpaced activity in the services sector.
"It's a very nice picture here -- the German recovery continues, led by manufacturing," said Chris Williamson, chief economist at Markit.
"There are strong gains in exports but also in domestic markets; as manufacturers gain confidence growth is sustainable they are starting to build up inventories," he added.
The manufacturing sector PMI reading jumped to 57.1 from 53.7 in January, blowing past expectations for a more moderate rise to 53.9, boosting growth in the overall private sector.
The services sector PMI remained in positive territory, growing for a seventh consecutive month but at a slower pace than in January and coming in just below expectations.
Germany emerged from its deepest post-war recession in the second quarter of 2009, when the economy grew by 0.4 per cent from the prior three months, and the rate of expansion picked up to 0.7 per cent in the July-September period.
Economic recovery stalled in the fourth quarter as weaker consumption and investment offset firmer exports, leaving Europe's largest economy on a weak footing going into 2010, but the PMI survey suggested better times lay ahead.
"It's a considerable turnaround from the flat growth figure we had in the fourth quarter -- it's pretty much consistent with growth of 0.5 per cent in the first quarter," said Mr Williamson.
The manufacturing sector gain was marked by a rise in a sub-index on output to its highest level since January 2007, increasing to 60.8 from 58.1. Orders from abroad also rose at their fastest rate in three years.
"A jump like this should encourage economists to revise upwards their industrial production forecasts. The inventory cycle is in full flow," said Mr Williamson.
Reuters