German Services Sector PMI hits 6-month high; points to strong Q4

Germany Markit's flash composite Purchasing Managers' Index (PMI) for November edged down to 54.9 from October's 10-month high of 55.1, slightly below consensus forecast of 55.0.

German flash PMI services-sector index hit a six-month high of 55.0 from 54.2 in October. This was the strongest reading for six months and also above consensus expectations of 54.2. Manufacturing sector was a drag, with the manufacturing index falling to a 2-month low of 54.4 from 55.0, missing expectations at 54.8.

"Data suggested that the economy will expand 0.5 percent in the final three months of 2016, lifting overall growth in the euro zone and more than doubling from the relatively weak 0.2 percent expansion in the third quarter," said IHS Markit economist Rob Dobson.

Input costs inflation hit the highest level since March 2012 and there was a small increase in output prices for the second successive month. Employment continued to increase and, significantly, there was the sharpest increase in order backlogs for five months.

New business saw solid increase supported by a rise in overseas demand. The manufacturing sector showed sharp increase in new export orders for the month. Business optimism in the services sector also increased to the highest level in seven month.

IHS Markit economist Oliver Kolodseike said that the survey results showed that the economy was in good shape and that the robust labor market continued to be one of the main growth drivers in Europe's largest economy.