Germany's lockdown-hit services firms remain optimistic -PMI

BERLIN, March 3 (Reuters) - Germany’s services sector continued to suffer under an extended coronavirus lockdown in February, but firms remained optimistic about the outlook in light of first steps to ease restrictions and efforts to roll out vaccines, a survey showed on Wednesday.

IHS Markit’s final services Purchasing Managers’ Index (PMI) fell to 45.7 last month from 46.7 in January.

The figure came in slightly lower than a flash value of 45.9 and marked the fifth month in a row that the PMI reading was below the 50 mark separating growth from contraction.

Business activity fell in almost all services sub-sectors, with only transport and storage providers reporting growth.

Service providers were nevertheless highly optimistic about the year-ahead outlook, reflecting hopes of a more normal operating environment once COVID-19 vaccines have been widely rolled out, IHS Markit said.

The overall degree of confidence in the service sector stayed close to a two-year high reached in January and was well above the long-term average of the survey series.

“Contrary to the picture for manufacturing, inflationary pressures across the service sector remained relatively muted in February, with any cost increases often being absorbed by firms due to the softness in demand,” IHS Markit economist Phil Smith said.

Final PMI data for manufacturing showed on Monday that German factory activity reached its highest level in more than three years in February, driven by higher demand from China, the United States and Europe.

The strong performance of manufacturers helped to offset the continued weakness in the services sector, pushing up IHS Markit’s composite PMI to 51.1 from 50.8 in the previous month.

Chancellor Angela Merkel and federal state leaders are expected to meet on Wednesday and ease some restrictions for shops and gatherings from next week while extending other measures until March 28, a draft document showed on Tuesday. (Reporting by Michael Nienaber, Editing by Catherine Evans)