BERLIN (Reuters) - Activity in Germany's service sector grew at the strongest pace in five months in January, a survey showed on Wednesday, supporting expectations that domestic demand will give impetus to an economy weakened by a recession in manufacturing.
IHS Markit's final services Purchasing Managers' Index (PMI) rose to 54.2 from 52.9 in December, matching a flash reading and remaining above the 50.0 mark that separates growth from contraction, as it has since May 2013.
The survey also showed new business expanded for the second month running and that the pace of employment in the sector hit a seven-month high.
"Germany's service sector made a bright start to the new year, which provides some welcome reassurance that the domestic economy has, by and large, remained resilient to the weakness in manufacturing," said IHS Markit's principal economist Phil Smith.
"Moreover, it bodes well for domestic demand that service providers stepped up the rate of job creation in January, though overall job gains continued to be limited by the staff cuts across manufacturing."
The final composite PMI, which tracks the manufacturing and services sectors that together account for more than two-thirds of the German economy, rose to 51.2, the second successive month of expansion. That was slightly above a flash reading of 51.1.