According to the report from IHS Markit, a further rise in manufacturing output helped to support growth across the German private sector in October. However, in a sign of a two-speed economy emerging, service providers recorded a modest decline in activity amid new restrictions and heightened uncertainty due to a second wave of coronavirus cases.

The headline Flash Germany Composite Output Index registered 54.5 in October. Though down slightly from September’s 54.7, the latest reading was still comfortably above the 50.0 no-change mark that separates growth from contraction.

Trends at the sector level continued to diverge in October, with the manufacturing output index pointing to the strongest pace of expansion since February 2011, while the equivalent measure of services business activity fell below the neutral 50.0 threshold for the first time since June. Service providers reported an impact on demand from new restrictions and increased uncertainty associated with a rise in the number of coronavirus disease 2019 (COVID-19) cases. New business fell across the sector for the first time in four months, led  by a sharp and accelerated fall in foreign demand.

This contrasted with the situation in the manufacturing sector, where latest data showed a record increase in order book volumes, supported by a resurgence in export business.