German Manufacturing Sinks Deeper Into Contraction in March

(Bloomberg) --

Germany’s manufacturing slump deepened this month amid tensions in global trade.

IHS Markit’s Purchasing Managers’ Index for the sector fell to 44.7, the lowest since 2012 and well below economists’ expectation of 48. That’s the third consecutive reading below 50, which indicates contraction. Gauges for new orders and employment declined.

The euro dropped after the survey was published and was down 0.4 percent to $1.1331 as of 09:32 a.m. Frankfurt time.

“The downturn in Germany’s manufacturing sector has become more entrenched,” said Phil Smith, principal economist at IHS Markit. “Uncertainty towards Brexit and US-China trade relations, a slowdown in the car industry and generally softer global demand all continue to weigh heavily.”

Read More: French Economy Unexpectedly Shows Contraction as Orders Ebb

The European Central Bank this month recognized that the euro zone economy is weakening by announcing a new program of long-term loans for banks. Officials say they’re still determining whether the slowdown is temporary after they ended a bond-purchase program at the end of 2018.

Germany’s composite index, which includes services, slipped to 51.5, the lowest in almost six years. The services index came in at 54.9 after posting 55.3 in February.

©2019 Bloomberg L.P.