BERLIN (Reuters) - Business conditions in Germany's services sector rebounded into expansionary territory in July, led by recoveries in hospitality and other consumer services sectors that had been hit hard by coronavirus curbs, index provider Markit said.
Wednesday's IHS Markit services purchasing manager index rose to 55.6, its first time above the 50.0 mark that separates expansion from contraction since lockdown measures were introduced in March.
The reading was the highest for Europe's largest economy since June 2019, and well above the previous month's 47.3. In April, the index hit an all-time low of 16.2.
The recovery was less pronounced in financial, rental and business services, which had been less affected by the lockdown, Markit said in its statement on Tuesday.
Some service providers had also resumed hiring, though the overall impact on job creation was marginal, Markit said, particularly because many sectors were only recruiting part-time workers.
Positive developments in the service sector combined with an upward trend in manufacturing to produce a recovery in the composite PMI index, which at 55.3 stood at its highest level since August 2018, driven by strong demand growth. Capacity utilisation was still low, however.
"After a record 10.1% collapse in economic output in the second quarter, GDP growth of 6% is expected in the third quarter," said Markit economist Phil Smith. "But we can't expect a return to pre-crisis levels before 2022."
(Reporting by Thomas Escritt; editing by John Stonestreet)