German growth edges up as manufacturing decline slows, PMI shows

By Maria Martinez

BERLIN (Reuters) - Business activity in Germany's private sector picked up slightly in February, driven by a steady performance in services and reduced drag from manufacturing, according to a survey published on Friday.

The HCOB German flash composite Purchasing Managers' Index, compiled by S&P Global, rose to 51.0 in February from 50.5 in January, marking a nine-month high and above the 50.0 threshold that separates growth from contraction.

Analysts polled by Reuters had forecast a reading of 50.8.

"The economy seems to be back on a growth path," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. "The recession has been easing for two months now."

Germany's economy contracted for the second consecutive year in 2024, highlighting the depth of the downturn gripping Europe's biggest economy.

The services sector showed resilience, with the business activity index for Germany's services sector at 52.2, down from 52.5 in January and below the 52.5 forecast by analysts polled by Reuters, but still in growth territory above 50.

"Fears that it would be dragged down by the manufacturing recession haven't come true so far," de la Rubia said, noting that the sector had grown for three months.

Although it remained in contraction territory, the manufacturing index improved to 46.1 from 45.0, beating expectations of a rise to 45.5.

The survey noted a broad-based softening of business optimism, with concerns over tariffs and geopolitics weighing on sentiment.

(Reporting by Maria Martinez; Editing by Toby Chopra)

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