Euro bounces back as German manufacturing growth hits two year high

German August purchasing manager's index (PMI) flash estimates have performed well, with services and manufacturing both beating expectations.

Manufacturing PMI was expected to rise from 50.7 to 51.1, instead it jumped to 52.0. The service sector was predicted up from 51.3 to 51.7, and also outperformed estimates, at 52.4.

The euro has snapped back up against the dollar on the news, after disappointing French data earlier.

Tim Moore, senior economist at Markit, said:

The survey provides confirmation that Germany’s economy is back on a solid footing and likely to remain in expansion through the third quarter of 2013. Manufacturing was an especially bright spot in August, with the latest figures suggesting that a rebound in export orders helped output growth accelerate to its strongest for over two years.

Service providers also benefitted from improving business conditions at home and across the euro area, with total activity levels rising for a third month running. Moreover, jobs growth was maintained in the service economy during August, pointing to sustained confidence in the near-term business outlook.