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BERLIN - Germany's private sector gained momentum in January as growth in services activity picked up and the pullback in manufacturing eased, a survey showed on Friday, suggesting Europe's largest economy may be picking up at the start of 2020.
IHS Markit's flash composite Purchasing Managers' Index (PMI), which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, rose to 51.1 from 50.2 the previous month.
It was the highest reading in five months and beat the consensus forecast in a Reuters poll of analysts who had expected a smaller increase to 50.5.
The figures suggest that "the storm clouds over the German economy may be starting to clear", said IHS Markit economist Phil Smith. He added that the manufacturing sector moved closer to stabilisation while services posted robust growth.
"Demand has started to firm up a little both at home and abroad, which is reflected in a first rise in new business for seven months," Smith said.
Business expectations also improved, with optimism among manufacturers reaching its highest level in 1-1/2 years, the survey showed.
The figures chimed with a ZEW survey published on Tuesday which showed the recent truce in the U.S.-China trade dispute left German investors at their most optimistic since mid-2015.
The German economy expanded by 0.6% last year, its weakest growth since 2013, as manufacturers struggled with a slowing world economy and rising uncertainty caused by trade disputes and Britain's planned-but-delayed departure from the European Union.
(Reporting by Michael Nienaber; Editing by Hugh Lawson)