LONDON: A sharp downturn in Germany’s manufacturing sector is weighing heavily on the 19-country eurozone economy, which is close to seeing a drop in overall activity, a survey showed Monday.

In it’s monthly overview of the manufacturing and services sectors, financial data firm IHS Markit said its composite purchasing managers’ index for the eurozone fell to 51.5 points in July from 52.2 the previous month. The fall takes the index close to the 50-point threshold that separates a fall in output from an increase.

The index masked differences between the sectors, with services continuing to grow solidly but manufacturing posting an accelerated fall in output.

“Trade war worries, slower economic growth, falling demand for business equipment, slumping auto sales and geopolitical concerns such as Brexit led the list of business woes, dragging manufacturing production lower at its fastest rate for over six years,” said the firm’s chief business economist, Chris Williamson.

Germany is faring particularly badly with growth now at its lowest rate in more than six years, according to IHS Markit. Its purchasing managers’ index slipped to 50.9 as a rapidly deteriorating manufacturing sector almost entirely offset robust growth in the services sector.

The overall pace of quarterly economic growth appears to have slowed to just 0.1 per cent, Williamson said. Figures released last week showed that the eurozone expansion in the second quarter halved to 0.2pc, further raising expectations that the European Central Bank will inject another dose of stimulus into the economy at its next meeting on Sept. 12.

Published in Dawn, August 6th, 2019