The rate of growth in Germany’s business activity slowed in September, a new survey showed, suggesting GDP growth of 0.4 per cent in the third quarter for Europe’s largest economy.

Markit’s flash composite Purchasing Managers’ Index (PMI) tracking manufacturing and services activity, which accounts for more than two-thirds of the German economy, inched down to 54.3 from 55.0 in August.

This was still comfortably above the 50 mark that separates growth from contraction and marked the 29th consecutive month of economic expansion.

"It seems that domestic demand is providing the key source for new orders among German manufacturers at the moment, given the weaker demand in the emerging markets and China in particular," Markit's chief economist Chris Williamson said.

Overall, the average reading for the third quarter as a whole was the best over a calendar quarter since the third quarter of 2014. Based on PMI data Markit, expects third-quarter GDP growth to continue at 0.4 per cent for the second consecutive quarter, Mr Williamson said.

Despite the strongest growth rate of new orders among German companies in almost two years, the German manufacturing index slid from 53.3 in August to 52.5 this month, undershooting a Reuters poll estimate of 52.8.

The sub-index for services slipped to 54.3 from 54.9 in August, but the industry’s outlook seems promising, with expectations for new business rising to their highest figure since June 2011.

Reuters