Forexpros – Manufacturing activity in Germany slowed to the lowest level in more than three years in July, renewing concerns over the impact of the euro zone’s sovereign debt crisis on the region’s largest economy, preliminary data showed on Tuesday.
In a report, market research group Markit said that its preliminary German manufacturing purchasing managers’ index fell by 1.7 points to a seasonally adjusted 43.3 in July from a final reading of 45.0 in June.
Analysts had expected the index to ease up by 0.3 points to 45.3 in July.
A reading above 50.0 on the index indicates industry expansion, below indicates contraction.
Manufacturers suffered a sharper drop in business activity than service providers during July, as well as a greater loss of momentum relative to the situation in June.
New orders received in the sector dropped at the fastest pace since April 2009.
Meanwhile, the report showed that service sector activity in Germany contracted at almost the same rate from last month.
The preliminary services purchasing managers’ index eased down by 0.2 points to a seasonally adjusted 49.7 in July from a reading of 49.9 in June. Analysts had expected the index to add 0.1 points to 50.0.
Commenting on the report, Tim Moore, Senior Economist at Markit said, “An accelerated decline in new work means that the stage could well be set for a steeper drop in GDP than the 0.2% fall recorded at the end of 2011.”
Following the release of the data, the euro turned fractionally lower against the U.S. dollar, with EUR/USD shedding 0.07% to trade at 1.2109.
Meanwhile, European stock markets erased gains. The EURO STOXX 50 fell 0.2%, France’s CAC 40 declined 0.1%, London’s FTSE 100 dipped 0.1%, while Germany’s DAX slumped 0.35%.
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