German economic activity maintained its strong growth momentum in the opening weeks of 2018, according to the country's purchasing managers, thanks to the fastest rise in service sector growth in almost seven years.
The composite purchasing manager index (PMI) of combined manufacturing and service sector business activity rose eased to 58.8 in January from 58.9 in December, but beat expectations of a dip to 58.6.
Any reading above 50 indicates expanding business activity.
The headline manufacturing PMI slipped to a three-month low of 61.2, down from December's record high of 63.3 and failing to match market expectations of a dip to 63.
IHS Markit, the compiler of the survey, put the performance into context, however, saying: "Although the lowest for three months, the latest reading still pointed to an overall rate of growth that was faster than at any other time in the past six-and-a-half years."
The service sector PMI rose to a near seven-year high of 57 in January, from 55.8 in December and beating market forecasts of 55.6.
Job creation across both business segments saw marked increases, with service sector employment rising to a 10-month high.
Underpinning growth in both manufacturing and service sector output was an increase - albeit at a slower pace - in new orders. Manufacturing saw its slowest rate of growth in new export orders in six months.
Inflationary pressures rose sharply - at the fastest pace in almost seven years - in January as higher input prices forced businesses to pass on higher costs to their clients.
Indeed, selling prices for goods and services also rose at the fastest pace in nearly seven years.
Phil Smith, principal economist at IHS Markit said: “Undeterred by ongoing political uncertainty and rising cost pressures, firms showed strong optimism towards the outlook for 2018, with the degree of confidence the highest since comparable records began in mid-2012.
"A strongly positive outlook among businesses was reflected in a pick-up in job creation, to show the second-steepest rise in private sector employment in the history of the survey.”