Business activity in Germany increased sharply in January, mainly boosted by a strong expansion in output of the services sector.

German services purchasing managers' index (PMI) rose to 60.0 in January from 59.2 in December, reaching a 55-month high, data from Markit showed on Monday.

However, manufacturing PMI unexpectedly fell to 60.2 in January from 60.7 in the previous month.

Markets had expected the manufacturing PMI to rise to 61.1 and services PMI to remain unchanged in January.

“Manufacturing exports were the initial spark that lit the German recovery, but the latest PMI numbers are an encouraging sign that that the torch has been passed on to the wider economy,” said Tim Moore, an economist at Markit.

Amid improved economic conditions, new spending from clients rose in January, pushing the business activity of service providers to record high since 2006.

“A survey-record expansion of service sector new business intakes suggests that a period of self-sustaining consumption-led growth, so often just a mirage on the horizon, may now lie ahead for the German economy,” Moore said.

Also, job creation in the private sector increased robustly in January and the rate of employment growth in the sector accelerated to a new survey record high.

“Strong job creation has laid the foundation for increased domestic consumption, while surging business optimism in Germany could lead to a secondary boost from investment spending,” Moore added.