Germany Gains Momentum as Manufacturing, Services Strengthen

Germany’s economy gained momentum this month, with a gauge of business activity rising more than economists forecast.

Markit Economics said on Tuesday its composite index of services and manufacturing climbed to 54 from 52.6 in May. That’s above the 50 mark that divides expansion from contraction and was stronger than the reading of 52.7 forecast by economists in a Bloomberg survey.

While the Bundesbank has raised its economic forecasts for Germany amid increasing consumer optimism, the outlook for the euro area has been overshadowed by the Greece’s standoff with its creditors. Markit’s report shows new business placed with German companies rose the least this year, and job creation slowed from May.

The data “paint a mixed picture of the health of Germany’s private-sector economy,” said Oliver Kolodseike, an economist at Markit. “While companies reported that output rose at a stronger rate than in May, the latest increases in new business and employment were only slight and suggest that activity growth may slow again in coming months.”

With the average reading for the second quarter as whole slightly weaker than that for the opening three months of the year, it’s unlikely economic growth has picked up since the first quarter, Kolodseike said.

For June alone, Markit’s manufacturing index for Germany advanced to 51.9 from 51.1 in May. The services measure increased to a three-month high of 54.2 from 53.

In an earlier report, Markit said France’s economic recovery showed signs of strengthening this month. Its composite gauge of manufacturing and services rose to 53.4, the strongest reading since August 2011, from 52 in May. The factory gauge increased to 50.5 from 49.4, the first time it’s indicated growth since April 2014.

Markit will publish its measures for the 19-nation euro-area at 9 a.m. London time. The composite is forecast to have slipped to 53.5 from 53.6 in May, according to a survey.

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