BERLIN Aug 21 Germany's private sector grew for a
16th month running in August, a survey showed on Thursday,
suggesting Europe's largest economy could expand robustly in the
third quarter after it suffered a surprise contraction in the
Markit's flash composite Purchasing Managers' Index (PMI),
which tracks growth in the manufacturing and service sectors
that make up more than two-thirds of the economy, fell to 54.9
in August from 55.7. But it nonetheless remained well above the
crucial 50 mark that separates growth from contraction.
"August's flash results provide further encouraging news for
Germany's private sector, with output and new orders rising
sharply," said Markit economist Oliver Kolodseike, adding this
pointed to Germany returning to growth in the third quarter.
The German economy shrank by 0.2 percent between April and
June, its first quarterly contraction in more than a year, due
to weak trade, a traditional growth engine, and a decline in
Rob Dobson, senior economist at Markit, said recent PMI
surveys suggested the economy could pull off a 0.7 percent
expansion in the third quarter.
He said there was no widespread evidence of the
Ukraine crisis pummelling German companies yet, even though
Germany is Russia's biggest trade partner in the European Union.
Some firms, however, were holding off on shipping existing
orders to Russia to see if their products would be hit by
sanctions, he said.
Business activity in the services sector increased slightly
less sharply than in July and service providers were at their
least optimistic in almost a year, with some survey respondents
saying this was due to the slowing economy and the planned
introduction of a minimum wage next year.
But there were some bright spots for service firms - new
orders piled in more quickly than in July and providers felt
confident enough to continue hiring new staff.
Growth in the manufacturing sector slowed slightly as output
and both domestic and export order growth slackened. Factories
cut jobs for a third straight month and they put the brakes on
their purchasing activity, suggesting they expect output to be
weak in the coming months.
But manufacturing firms were able to hike their output
prices more sharply while input prices fell, boosting margins.
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(Reporting by Michelle Martin; Editing by Stephen Brown and