German business activity grows for second straight month in May, PMI shows

BERLIN (Reuters) - German private sector activity expanded in May for the second consecutive month, driven by strong activity in services, a preliminary survey showed on Thursday.

The HCOB German Flash Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 52.2 in May from 50.6 in April. That was above a Reuters poll forecast of 51.0.

The composite PMI index tracks the services and manufacturing sectors that together account for more than two-thirds of the euro zone's largest economy. A reading above 50 signals growth in activity.

"These numbers offer hope," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. "The composite PMI now signals solid growth."

The index for the service sector rose to 53.9 in May from 53.2 in April, also its highest in 11 months and above a forecast of 53.5.

"The service sector, in particular, showed robust growth in May, expanding for three consecutive months," de la Rubia said.

Although manufacturing remained in contraction, the manufacturing PMI index rose to 45.4 from 42.5 in the previous month, above the forecast of 43.1 in a Reuters poll and at a 4-month high.

"While the increase in the headline manufacturing PMI is positive, the accelerated downsizing of purchased and final goods stocks slightly dampens the outlook," de la Rubia said.

Despite some weakness in manufacturing, in general there was a pick-up in hiring activity as firms reported stronger demand and greater optimism towards the outlook, the survey showed.

(Reporting by Maria Martinez; Editing by Hugh Lawson)