BERLIN (Reuters) - Germany's downturn showed signs of easing in November with both manufacturing and services activity falling more slowly than in previous months, a preliminary survey showed on Thursday, raising hopes that a recession might be shallower than expected.
The HCOB German Flash Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to a four-month high of 47.1 in November from October's 45.9, above the 46.5 forecast by economists.
A reading below the 50 level points to a contraction in business activity.
The composite PMI index tracks the services and manufacturing sectors that together account for more than two-thirds of the German economy, the euro zone's biggest.
"A return to growth territory is a plausible prospect, potentially materialising by the first half of the upcoming year," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Business activity in the services sector fell for the third time in the past four months but with a more modest decline compared to October with a reading of 48.7, slightly above analysts' forecast of 48.5.
Upward pressure on wages and output prices in the services sector suggested inflation was unlikely to ease significantly in the coming months, according to the survey.
The manufacturing PMI reached a six-month high of 42.3 from 40.8 in October, also above analysts' expectations, though still in contraction territory.
"In manufacturing there is a silver lining as the decline in new orders is tapering off. This is supported by both domestic and external orders," de la Rubia said.
He added that the current figures suggested German economic output in the fourth quarter would contract by 0.7%, less than the contraction of 0.9% previously forecast.