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German manufacturing sector weakens more than expected

By Oliver Haill

Date: Friday 22 Mar 2019

German manufacturing sector weakens more than expected

(Sharecast News) - Germany's manufacturing output has shrunk to the lowest level for more than six and a half year, industry data showed on Friday.
IHS Markit's purchasing manager's index for the sector dropped from 47.6 last month to 44.7 for March, the lowest level since August 2012 and well below economist's forecasts for a reading of 48.

Brexit, US-China trade tensions and issues in the car industry all were cited as weighing heavily on the sector.

German services PMIs was a little better, falling less than expected to 54.9 for March from 55.3 a month ago.

French PMIs were also published, with manufacturing and services both narrowly, and unexpectedly, slipping below the 50.0 mark that separates growth from contraction. Manufacturing fell to 49.8 from 51.5 and services to 48.7 from 50.2.

"A series of worse than expected economic releases from Europe have sounded the alarm bell not just for the bloc, but also the global economy, by providing further evidence of a worldwide slowdown in economic activity," said David Cheetham, market analyst at XTB.

"These industry surveys are keenly followed, and unlike employment or GDP figures they are commonly seen as leading indicators due to the nature of their composition which is heavily weighted to future expectations.

"Due to the country's large level of exports, German manufacturing is often seen as a bellwether of global economic activity and with this metric falling to its lowest level since August 2012 - and in doing so chalking up a 3rd consecutive month in contraction territory with another PMI reading below 50 - it's sending a clear and obvious warning sign on the health of the global economy."

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