BERLIN – Germany’s services sector grew at the fastest pace in six months in March after COVID-19 restrictions were lifted, a survey showed on Tuesday, but uncertainty after Russia invaded Ukraine and accelerating inflation clouded the outlook.
S&P Global’s final PMI services index fell to 56.1 from 55.8 in February. That reading was down from an initial “flash” value of 55.0.
It was the sector’s strongest month since last September as hiring activity remained solid.
“With manufacturing production coming under pressure from the fresh supply constraints that have resulted from Russia’s invasion of Ukraine, the service sector provided a key support to overall economic activity in March,” said Phil Smith, Economics Associate Director at S&P Global.
The composite PMI index, which comprises both the services and manufacturing sectors, fell to 55.1 from 55.6 in February. The reading was lower than the flash figure of 54.6.
“That’s really where the good news ends, however. Elevated levels of uncertainty, declining export demand and a squeeze on purchasing power from sharply rising prices all weighed on inflows of new businesses in March,” he said.
“These factors were compounded by concerns about the effects of supply-chain disruption on the economy, to leave services firms feeling a lot less optimistic about the outlook than just a few weeks ago.”