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BERLIN, (Reuters) - Growth in Germany's services sector accelerated in February after weakening to a four-month low at the start of the year, a survey showed on Friday, suggesting Europe's largest economy will post healthy growth in the first quarter.
Markit's final services index rose to 54.4 from 53.4 in January, helped by a sharper increase in new business in post
and telecommunications as well as transport and storage. Markit's final composite Purchasing Managers' Index (PMI),
which tracks the activity in manufacturing and services that together account for more than two-thirds of the economy, rose to 56.1 from 54.8 in January to reach a 34-month high.
Markit's final PMI for manufacturing on Wednesday showed growth had accelerated at the strongest rate in nearly six years in February. It said the results suggest manufacturing would contribute to overall growth in the first quarter.
Friday's results suggest that the services sector, which is not traditionally a German strength, would also make a
contribution to growth. Services providers recorded the strongest expansion in new work since February 2016 after three months of slowing growth. "The latest PMI data add to our expectations that economic growth will strengthen in the first quarter to at least 0.6 percent quarter-on-quarter, marking a strong start to 2017," Markit economist Trevor Balchin said.
To address an accumulation of backlogs, German service sector companies stepped up recruitment. Employment rose for a
40th consecutive month and at the fastest rate since June 2011.
Markit also said that companies in the services sector were positive regarding the 12-month outlook and sentiment improved for the third successive month to the sharpest since March 2011.
Reporting by Joseph Nasr; Editing by Toby Chopra