German Growth Fastest in Six Months on Services Strength

(Bloomberg) -- Germany’s economic expansion picked up to its fastest pace in six months in August as strong growth in services offset a decline in goods production.

IHS Markit’s composite index of manufacturing and services rose to 55.7 from 55.0. Economists surveyed by Bloomberg had predicted an increase to 55.1.

German Growth Fastest in Six Months on Services Strength

Prices rose closer to the survey’s record peak reached in January, suggesting “the potential for some renewed upward pressure on the headline inflation rate in coming months,” according to Phil Smith, an economist at IHS Markit.

The euro area’s biggest economy is benefiting from record-low unemployment at home and solid growth in the rest of the currency bloc. A trade dispute with the U.S. that could have led to higher tariffs seems to have subsided for now, and the Bundesbank said this week that while Germany’s expansion will cool this quarter, the economy remains on a “sound” path of growth.

Business confidence improved to the highest in four months, Markit said, though manufacturers were more pessimistic than services providers.

IHS Markit’s composite gauge for the euro area is forecast to climb to 54.5 from 54.3 when that report is published at 10 a.m. Frankfurt time. The European Central Bank will publish new economic projections for the euro zone on Sept. 13 after officials meet to set monetary policy.

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