IHS Markit’s final services Purchasing Managers’ Index (PMI) jumped to 51.5 last month from 45.7 in February.
The figure came in better than a flash value of 50.8 and marked the first month since September above the 50.0 mark that signals growth.
IHS Markit economist Phil Smith said the improvement was mainly due to an easing of restrictions for some shops and services while authorities extended other curbs into April.
The better-than-expected performance of services helped to push IHS Markit’s composite PMI to 57.3 in March from 51.1 in February.
PMI data released last week showed that German factory activity grew at the fastest pace on record in March thanks to a surge in demand from the United States and China.
The growth outlook for Europe’s largest economy remains clouded, however, by a more contagious virus variant and rapidly rising COVID-19 cases that could force authorities to tighten restrictions again in the coming weeks.
Bundesbank President Jens Weidmann told Reuters on Tuesday that the German economy will likely miss the central bank’s growth projection of 3% this year as pandemic-related restrictions weigh on business activity. Reporting by Michael Nienaber, editing by John Stonestreet