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German manufacturing returns to growth on rising orders - PMI
BERLIN |
BERLIN (Reuters) - Germany's manufacturing sector returned to growth in July, expanding at the fastest rate in 1-1/2 years as output and new orders rose, a survey showed on Thursday.
Markit's Purchasing Managers' Index (PMI) for the German manufacturing sector, which makes up around one-fifth of the economy, rose to 50.7 in July from 48.6 the previous month.
That was above both the 50 mark that separates growth from contraction and the flash reading of 50.3.
"Germany's manufacturing sector saw a positive change of direction for overall business conditions in July, as solid output growth and a rebound in new orders cemented the strongest overall performance for a year-and-a-half," said Markit economist Tim Moore.
A bastion of strength in the early years of the currency bloc's crisis, the German economy narrowly avoided recession at the start of 2013 as a worsening global outlook diminished appetite for its products and willingness to invest.
Recent data suggests growth, especially in the domestic economy, is gaining traction. Consumer morale jumped, joblessness dropped and business sentiment rose.
"Improvements ... were heavily linked to greater domestic spending, which stood in contrast to weakness evident abroad, as subdued demand from China and within the euro area kept new export work on a downward tilt," said Moore.
"Consumer and intermediate goods producers saw the greatest rises in output volumes during July, while only the export-focused investment goods sector failed to achieve an expansion of production."
A sub-index tracking new export orders registered below 50 for the fifth consecutive month, although orders overall grew at the fastest pace since February, according to the survey.
Many German firms have complained about weak demand in China and Europe during the current earnings season, while German exports fell the most since late 2009 in May, data showed last month.
On the bright side, the manufacturers' input prices subindex stayed below the 50 mark for the eighth consecutive month in July and shrinking at the fastest rate in four years.
Firms cited lower steel prices, alongside a general decrease in raw material costs.
The German Institute for Economic Research (DIW) said on Wednesday that a rise in industrial production and a recovery in the construction sector likely helped the economy grow by around 0.5 percent in the second quarter.
(Reporting By Sarah Marsh; Editing by Hugh Lawson)
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