German factory growth in January holds near record high - PMI

German manufacturing activity posted more blistering growth in January despite slowing to a three-month low, a survey showed on Thursday, suggesting the sector will contribute to an economic expansion in the first quarter.

Markit's Purchasing Managers' Index (PMI) for manufacturing, which accounts for about a fifth of the economy, fell to 61.1 from 63.3 in December, which was a record high.

That was lower than a flash reading of 61.2 and well above the 50 line that separates growth from contraction.

"Factories continue to ramp up production at a pace rarely seen over the past two decades of collection, and the sustained strong rate of job creation suggests there's appetite for further capacity expansion amid a positive outlook for the year ahead," said IHS Markit economist Phil Smith.

He added: "A key insight from the latest survey was a pick-up in price pressures to the highest seen since early 2011, as a continued supply-side squeeze inflated purchasing costs and prices charged at the factory gate."

Markit said the intensification of price pressures will dampen demand and the recent strengthening of the euro against the dollar could weigh on exports.