Germany's private sector grew faster in October as manufacturing rebounded, suggesting Europe's largest economy may be gaining momentum in the fourth quarter, a survey showed today. 

Markit's flash composite Purchasing Managers' Index, which tracks growth in the manufacturing and services sectors that account for more than two-thirds of the economy, climbed to 54.3 from 54.1 in September. 

That was well above the key 50 threshold dividing growth from contraction and also pointed to a slight pick-up in growth momentum. 

It was driven by expansion in both the services and manufacturing sectors. 

"The services sector numbers show some fairly decent growth in the domestic market and manufacturing is benefiting from that," said Markit chief economist Chris Williamson.

German manufacturers' order books posted mild growth in October after shrinking in September. 

Services providers also saw new business increase, albeit at a slightly slower pace than in the previous month. 

Germany's economic outlook has deteriorated during the year as shown by several grim economic data and weak sentiment gauges, sparking renewed concern for a euro zone that is barely generating any inflation and needs support from its largest economy. 

Germany posted a quarterly contraction of 0.2% in the second quarter. Williamson said growth fears were somewhat exaggerated, and he thought special factors such as public holidays had dragged down the second quarter. 

"We should see a bounce back in the third quarter, it will only be modest, maybe 0.2-0.3%, and that rate of growth will probably have been sustained at the start of the fourth quarter," he said. 

"It is not as bleak a picture as many official data present for Germany, but it is suggestive of one where German companies are being squeezed," he added. 

The sub-index for the German manufacturing sector rebounded to 51.8 in October from 49.9 in September, easily beating even the most upbeat forecast in a Reuters poll. 

The service sector sub-index slipped to 54.8 from 55.7, however, and service providers' optimism over the future fell to its lowest level since December 2012.