Eurozone manufacturing output shrinks in August

Manufacturing activity in the eurozone shrank in August by more than initially thought, a survey has indicated.

Markit said the German economy, the eurozone's main engine of growth, was stalling

Final data for the Markit Manufacturing PMI index fell to 49 from 50.4 in July, below initial estimates of 49.7. A reading below 50 indicates contraction.

August’s figure is the lowest recorded in two years.

Markit said new orders fell across all 17 countries in the bloc, while job creation grew at its slowest rate for almost a year.

Germany’s manufacturing sector was the strongest in the eurozone at 50.9, while Greece’s was the weakest, at 43.3.

The French, Italian and Spanish manufacturing sectors all contracted. Outside the eurozone, UK factory activity also shrank.

“Final PMI data for August were even worse than the earlier disappointing flash numbers, signalling an end to the manufacturing recovery which began in 2009,” said Chris Williamson, chief economist at Markit.

“Worryingly, Germany saw new export orders fall at the fastest rate of all countries surveyed, meaning the eurozone can no longer rely on export-led growth in its largest member state to help sustain even a lacklustre recovery for the region as a whole.”

 

Meanwhile, factory output in the US grew only slightly in August, expanding at its weakest rate for two years.

“There is a risk of a return to recession,” said Jeavon Lolay at Lloyds Banking Group. “We are not out of the woods.”

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