Germany took a step forward in its recovery from the coronavirus slump, with a key measure of activity showing growth for the first time in five months. IHS Markit’s composite Purchasing Managers Index jumped to 55.5 in July from 47 in June. The figure was better than economists had predicted, and puts the gauge above the key 50 level that divides expansion from contraction.

Private-sector activity returns to growth

The reading keeps Europe’s largest economy heading in the right direction after a devastating downturn in the second quarter during the virus lockdowns. Figures next week are forecast to show a contraction of about 9% in the three months through June. That will reflect the depth of the slump, with surveys pointing to an improvement more recently.

The Markit report showed the pickup in July was led by services, though manufacturers reported a “solid” rise in export sales. Despite that, factory employment fell, with 30% of manufacturers reporting a drop in staff numbers.