By Maria Martinez
BERLIN (Reuters) - Business activity in Germany's services sector remained under pressure from weak demand in February, a survey showed on Tuesday.
The HCOB final services Purchasing Managers' Index (PMI) rose to 48.3 in February from 47.7 in January, but remained below the critical 50.0 mark that separates growth from contraction.
"Although their activity is shrinking again, the rate of decline has eased, standing in stark contrast to the deepening crisis gripping manufacturing," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Inflationary pressures intensified, with rates of increase in input costs and output prices reaching the highest for ten and six months respectively, the report said.
"Given the overall fragility of the economy, the persistent uptick in inflation within the services sector raises eyebrows," de la Rubia said.
On the bright side, firms' expectations for the year ahead improved to the highest since last April, which in turn supported a notable pick-up in the rate of job creation.
The composite PMI index, which comprises services and manufacturing, fell to a four-month low of 46.3 in February from 47.0 in the previous month.
The faster rate of decline was due to a sharp and accelerated reduction in manufacturing production, the report said.