The Markit Flash Germany Composite Output Index remained in expansion territory at the start of 2015, signalling a further rise in German private sector output. It came at 52.6 in January, up from December's 52, the rate of growth accelerated slightly and was the strongest in three months. Companies largely attributed higher demand to increased new orders.

Output growth strengthened across both the services and manufacturing sectors. The amount of new work placed with German private sector companies rose in January, thereby ending a two-month stretch of contraction.

Meanwhile, new export orders fell for the second time in the past three months. Manufacturers commented on lower demand from Russian and Asian markets.

The labour market showed further strength at the start of 2015, with private sector employment rising for the fifteenth consecutive month.  Some survey participants hired additional workers in response to higher business requirements, while others commented on the processing of backlogs.

Indeed, backlogs of work fell further in January, albeit at the weakest rate since October. Manufacturers and service providers both reported declines in work outstanding compared to the previous month.  January data signalled the second successive monthly fall in input  prices faced by German private sector companies.

The rate at which costs fell accelerated to the sharpest in nearly five-and-a-half years, with the decline largely attributed by panellists to lower oil and energy prices. 

Companies responded to lower input costs by reducing their charges in January.  The rate at which selling prices were lowered was the strongest since February 2010.

Manufacturers reported a further deterioration in vendor performance in January, as highlighted by a lengthening in average lead times.  Meanwhile, goods producers remained cautious about their stock policies, with both pre- and post-production inventories falling since December. Sentiment in Germany’s service sector improved markedly in January, having slumped to a near two-year low in October. Optimism towards the 12-month business outlook was supported by new business opportunities, new investments and increased new orders, according to survey respondents.

Oliver Kolodseike, economist at Markit and author of the Flash Germany PMI, said, "Germany's private sector started 2015 on a positive, with new orders returning to growth and activity rising further. The pace of output growth picked up marginally from that seen in December, but remained well below levels seen at the beginning of last year."

"Moreover, today's survey results showed that the German jobs engine kept humming in January. Private sector employment rose despite the introduction of a national minimum wage at the beginning of the year, as companies reported increased new orders and higher business requirements."

"Lower oil and energy prices meanwhile resulted in the second successive monthly fall in input costs. The rate at which input prices fell was in fact the strongest since September 2009."