German business activity returned to growth in February for the first time in eight months as supply bottlenecks eased and also thanks to improving underlying demand, a preliminary survey showed on Tuesday.

S&P Global’s composite purchasing managers’ index (PMI) rose to 51.1 in February from 49.9 in January, beating analysts’ expectations for a reading of 50.4 points.

February was the first time since June that the indicator was above the 50 level indicating growth in activity.

The index measures the services and manufacturing sectors, which together account for more than two-thirds of Europe’s largest economy.

The services sector posted slight growth for the second straight month, rising to 51.3 from 50.7 in January, in line with analysts’ expectations for a reading of 51.0.

The manufacturing sector, meanwhile, fell for the third consecutive month, to 46.5 from 47.3, remaining in contraction territory for the eighth consecutive month and below the expected reading of 48.0. However, the output sub-index rose for the second straight month, to 51.3 from 50.7 in January.

However, the output sub-index surpassed the 50 mark to 50.6, representing growth for the first time since May.

Phil Smith, associate economic director of S&P Global Market Intelligence, said: “It is encouraging that the increase in business activity has been widespread by sector.”

“However, while the rebound in activity in the services sector was related, at least in part, to demand, the increase in output in the manufacturing sector was almost exclusively due to a substantial reduction in supply chain bottlenecks, which simply allowed producers of goods to catch up with backlogs.” Added.