German services sector picks up pace in April, PMI shows

By Maria Martinez

BERLIN (Reuters) - Business activity in Germany's services sector picked up pace at the start of the second quarter, supported by growth in new orders, a survey showed on Monday.

The HCOB final services Purchasing Managers' Index (PMI) rose to 53.2 in April from 50.1 in March, moving further above the 50.0 mark that separates growth from contraction. The reading was the highest since June last year.

"The German service sector, which was still in the doldrums at the start of the year, is recovering fast," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

Not only did activity expand at the quickest rate in ten months but there were also recoveries in new and outstanding business as well as employment, de la Rubia noted.

At the same time, the survey signalled stubborn inflationary pressures with both input costs and output prices increasing faster than their historical averages.

"We interpret this pricing power as a further indication of the overall healthiness of the service sector," de la Rubia said.

The composite PMI index, which comprises services and manufacturing, climbed to 50.6 in April from 47.7 in March, moving above the 50.0 threshold for the first time in ten months.

The gains were driven purely by the services sector, with manufacturing still in deep decline, the report said.

(Reporting by Maria Martinez; editing by Christina Fincher)

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