German manufacturing falls for fourth consecutive month

Manufacturing woes continue across the Eurozone, with the bloc enduring its 11th straight month of decline

Germany’s private sector shrank for the fourth month in a row in December, according to IHS Markit’s flash composite Purchasing Managers’ Index (PMI).

The Index came in unchanged at 49.4, below the magic 50 mark that separates contraction from expansion. The figure disappointed analysts, who had forecast a rise to 49.9.

The Index tracks both manufacturing and service sectors, and it’s the performance of Germany’s factories that continues to hamper chances for economic recovery.

A sub-index focusing on manufacturing activity slipped to 43.4 in December from 44.1 in November. At the same time, the services sector hit 52.0, a four-month high.

IHS economist Phil Smith said: “Manufacturing continues to weigh heavily on private sector output, with faster decreases in factory production and employment in December causing the manufacturing PMI to tick down for the first time in three months.”

Smith added that “the flash data point to a weak end to a difficult year for the German economy.”

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Germany’s heavily export-reliant manufacturing sector has endured a difficult period, with the US-China trade war and uncertainties over Brexit contributing to plunging orders.

Germany’s manufacturing woes are feeding into a gloomy picture for the Eurozone overall, IHS figures suggest. The Eurozone PMI was 50.6 in December, with manufacturing in the bloc enduring its 11th straight month of decline.

“The Eurozone economy closes out 2019 mired in its worst spell since 2013, with businesses struggling against the headwinds of near-stagnant demand and gloomy prospects for the year ahead,” said IHS Markit’s chief business economist Chris Williamson.

FURTHER READING: Germany avoids recession with modest return to growth

FURTHER READING: Bundesbank: Germany may be in recession already

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