(Bloomberg) -- German private-sector activity grew at the fastest pace in a year as the country’s industrial malaise abated.

S&P Global’s purchasing managers’ index for Europe’s largest economy rose to 52.2 in May - beating analyst expectations and staying above the 50 threshold that signals growth for a second month.

Services continued to lead the advance, though the reading for manufacturing — while still in contraction territory — was the highest since January.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, noted signs of potential turnaround in that sector.

“These numbers offer hope,” he said in a statement. “Those predicting a prolonged weakness in the German economy might be proven wrong soon.”

There was less positive news in France, however, where the composite gauge unexpectedly dipped back below 50, dragged down by services.

The euro zone’s two top economies expanded more than expected in the first quarter of 2024, helping to pull the 20-nation bloc out of the recession it experienced in the latter half of last year.

Analysts expect reductions in interest rates by the European Central Bank to underpin a recovery across the region later this year, with inflation also retreating back toward 2% after its historic spike.

S&P said businesses in Germany raised output prices at the slowest pace since the start of 2021, while France saw one of the softest rates of output-charge inflation in more than three years - even as input cost gains stayed elevated.

Both the Bundesbank and the Bank of France predict slight growth in gross domestic product in the second quarter. Hamburg Commercial Bank said the latest data suggest expansion of 0.3% for each country this quarter.

Norman Liebke, an economist at Hamburg Commercial Bank, said there’s “no reason for any major concern” on France.

“Demand has grown for the first time in over a year and employment is still growing robustly,” he said. “France’s manufacturing sector is slowly making a comeback.”

PMIs are closely watched by markets as they arrive early in the month and are good at revealing trends and turning points in an economy. A measure of breadth of changes in output rather than depth, business surveys can sometimes be difficult to map directly to quarterly GDP.

--With assistance from Joel Rinneby and Mark Evans.

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