Europe’s largest economy, Germany, has taken a big step, leaving the fall of 2019 behind and starting the new year with increased activity and business confidence.

The IHS Markit’s core PMI for Germany is rising to its highest level in the last 5 months from 51.1 points in January, exceeding its forecast for an increase of up to 50.5 points. Although the industry sector is still shrinking, its pace is slower, with industrial PMI reaching 45.2 points in January. Although the factory indicator is still showing shrinkage, it has increased in three of the last four months and is currently at its highest level in the last 11 months. Germany’s PMI for services rose to 54.2 points in January from 52.9 points in December.

Meanwhile, business activity data were also released in France, the UK, and the Eurozone.

The PMI index in France declined slightly in January to 51.5 points. For comparison, the indicator sent last year to a level of 52 points.

In the UK, economic activity is markedly improving, with total PMI there reaching 52.4 points in January, up from 49.3 points reported in December.

In the Eurozone, industrial PMI reported an improvement to 47.8 points, but still remains well below the 50-point line separating expansion from contraction. However, the PMI index for services fell to 52.2 points from 52.8 points. Thus, the total PMI for the Eurozone amounts to 50.9 points.

There is still a risk that Europe will be involved in a trade war with the US. US President Donald Trump has threatened to impose a 25% duty on car imports from the region if the union does not agree to a trade deal. If duties are imposed, Germany will be particularly hard hit as the automotive sector is a key part of the country’s industry. On the other hand, data from the IHS Markit survey contributed to an increase in optimism, pointing out that levels of new private-sector business rose for the first time in seven months, while declines in manufacturing orders decreased to their lowest levels in the last 15 months.