(Bloomberg) -- Germany's private sector saw overall output improve for a second month in May, despite a slowdown in services and a workforce contraction in manufacturing.
A Purchasing Managers' Index increased to 52.4 from 52.2 the previous month, IHS Markit said on Thursday. Economists had forecast a decline.
Europe's largest economy stagnated in the second half of last year and a bounceback in the first three months of this year was probably due to one-off factors. The Bundesbank has said that it sees few signs yet that German growth is picking up sustainably.
Separate data on Thursday confirmed that the economy expanded 0.4% in the first quarter, driven by the strongest private consumption in almost eight years.
Read more: German Consumer Spending Pulls Economy Out of Stagnation
A broad gauge of activity in the manufacturing sector worsened, even as the contraction in output eased. IHS Markit said that reflects falling backlogs of work as capacity pressures softened, with employers cutting their workforces. Factory job numbers are declining at the steepest rate in over six years.
“It is manufacturers who remain the most downbeat about the outlook amid lingering global trade tensions,” said IHS Markit economist Phil Smith. “Though the survey highlights that fears of a slowdown may have started to spread to services, where confidence is now at its joint-lowest since 2014.”
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