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German manufacturing sector nears growth in August

Published 09/01/2009, 03:55 AM
Updated 09/01/2009, 03:57 AM

BERLIN, Sept 1 (Reuters) - Germany's industrial sector came close to returning to growth in August on a jump in output and new orders, a survey showed on Tuesday in the latest positive sign for Europe's largest economy.

The Markit purchasing managers' index (PMI) of activity in the German manufacturing sector rose for a seventh month running, hitting 49.2 and closing the gap with the 50.0 threshold separating growth from contraction.

The manufacturing sector, as measured by the PMI, last posted growth in July 2008. A flash estimate for August had given a reading of 49.0. In July the index stood at 45.7.

"The recovery of the manufacturing sector from the lows of early 2009 remained firmly on track in August," said Tim Moore, an economist at data compiler Markit.

The data added to a series of positive reports suggesting the economy could be on an upward path after posting surprise growth in the second quarter which pulled it out of its worst recession since World War Two.

Last week, the Ifo think tank's gauge of German business sentiment for August rose to its highest level in nearly a year, and a senior Ifo researcher said forecasts for the economy to shrink 6 percent or more in 2009 should be revised upwards.

Germany's manufacturing sector is geared towards exports and had been badly battered by the global slump, but the configuration also makes it poised to recover in step with increases in foreign demand.

The PMI survey showed new export orders increased in August for the first time since last summer, with a sub-index rising to 53.5 from 49.8 in July.

Detailed data on gross domestic product, also released last week, showed foreign trade was a positive contributor to the economy in the second quarter -- albeit only because exports fell less sharply than imports over the period.

Earlier this month, trade data showed exports surged at their fastest pace in almost three years in June. (Reporting by Brian Rohan; Editing by Andy Bruce)

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