German manufacturing sector expands for 10th straight month: PMI

BERLIN (Reuters) - Germany's manufacturing sector grew for a tenth consecutive month in April, helped by rising output and orders, a survey showed on Friday, suggesting this important branch of Europe's largest economy started the second quarter on a strong footing.

Markit's Purchasing Managers' Index (PMI) for the German manufacturing sector, which accounts for about a fifth of the economy, rose to 54.1 in April from 53.7 in March, coming in a tick below the flash reading of 54.2.

"Final PMI data signaled a slight acceleration in Germany's manufacturing upturn in April, with production growth the second-sharpest in nearly three years," said Oliver Kolodseike, an economist at Markit.

Factories ramped up production for a 12th straight month, with firms attributing this to a better economic environment and fuller order books. Intermediate goods firms benefitted most.

More than a third of the firms surveyed said new orders had risen in April and though data showed growth in new contracts slowing slightly compared with the previous month, the reading remained above the long-run average.

Higher order levels also boosted backlogs of work and bigger workloads meant firms were slower to deliver their goods.

New export orders climbed for a ninth consecutive month, helped by greater appetite from countries in Asia and Europe as well as the United States.

But firms remained reticent in some regards.

"Despite robust output growth, companies were relatively cautious with regards to hiring efforts and buying activity," Kolodseike said.

Manufacturers took on new staff for a fifth consecutive month as firms needed to produce more and expected further growth in the coming months. That tallies with data published this week showing German unemployment fell in April.

Input prices dropped at their sharpest rate since July as competition among suppliers heated up, firms sealed price deals and the price of some raw materials fell. Output prices were, however, flat.

In 2013 the German economy put in its weakest performance since the financial crisis in 2009 with just 0.4 percent growth but it is expected to fare better this year, with the government forecasting it will grow by 1.8 percent.

Economists polled by Reuters expect the economy to grow by 0.4 percent in the second quarter.

(Reporting by Michelle Martin; Editing by Toby Chopra)