BERLIN (Reuters) - Growth in Germany's services sector accelerated to the highest level in four months in June, a survey showed on Wednesday, adding to signs that consumption is fuelling an upswing in Europe's largest economy as exports weaken.
Markit's final services Purchasing Managers' Index (PMI) rose to 54.5 from 52.1 in May, which was a 20-month low. The figure was higher than a flash reading of 53.9 but still below a near-seven-year high in January.
Markit put the rebound down to stronger new orders underpinned by higher domestic demand. To meet the higher demand, service providers hired new workers at the highest rate since January.
"June's increase in activity in the largely domestically focused service sector was the steepest seen since February and strong enough to offset a further loss of momentum across manufacturing, where slowing global trade has weighed on growth," said IHS Markit's principal economist Phil Smith.
"An expanding workforce base represents another factor supporting household spending, alongside upward wage pressures and still-elevated consumer confidence," he added.
Markit's PMI for manufacturing, which accounts for about a fifth of the German economy, fell to 55.9 from 56.9 in May, data showed on Monday.
The fall was attributed to manufacturing export sales and new orders growing at their slowest pace in more than two years. This signaled the sector was cooling as fears of a full-blown global trade war cloud the economic outlook.
The rebound in services more than compensated for the slower growth in manufacturing.
As a result, Markit's final composite PMI, which tracks activity in manufacturing and services that together account for more than two-thirds of the economy, rose to a three-month high of 54.8 from 53.4 in May.