Job growth in the German services sector rose at the fastest rate in 11 years in August, IHS Markit reported in its Germany Services Purchasing Managers’ Index released Wednesday.

The increases reflected efforts to boost capacity amid rises in business activity and new orders.

By sub-sector, “post and telecommunications” and “transport and storage” saw the fastest employment growth. The only drop was in “hotels and restaurants.”

“There were many positive takeaways from August’s services survey, but the real highlight was the news of employment rising at the quickest rate in nearly 11 years,” said Phil Smith, principal economist at IHS Markit. “Service providers’ increased appetite for new hires reflected not only rising workloads and increased pressure on capacity, but also a strong belief that growth is set to continue in the year ahead.”

Smith continued: “The downside for businesses is that an increasingly tight jobs market is adding to wage pressures. Owing to the increasing price of labour as well as higher transport costs, input prices in service sector are rising at a rate unseen since early-2011. Thankfully for businesses, the strength of domestic demand means that they have been able to pass higher costs back onto clients.”

The German Services PMI activity index rose to a reading of 55.0 in August from 54.1 in July. The German Composite PMI Output Index rose to 55.6 in August from 55.0 in July.

In other reports on Europe released Wednesday:

• In France, the rate of services sector job growth rose to a four-month high, according to HIS Markit’s report on the France Services Business Activity Index report. “Although new business and jobs in services both rose more quickly in August, the longer-term outlook is less rosy, as the measure of business sentiment among service providers fell to a 19-month low,” said Trevor Balchin, economics director at IHS Markit. “This follows a similar trend to that seen in the earlier manufacturing PMI data, where output expectations are currently the weakest since December 2016.”
• Services sector job growth in Italy was solid and extended, according to the IHS Markit Italy Services Purchasing Managers’ Index report. The growth was driven by higher workloads.
• The rate of service sector job growth in Spain softened, according to the IHS Markit Spain Services Purchasing Managers’ Index report.