European manufacturers face worst downturn in nearly six years
The European manufacturing industry contracted in February for the first time since June 2013, driven in part by the economic turmoil that has gripped Italy and Germany.
The two nations’ factory sectors slumped to the worst performance since December 2012 in Germany and May 2013 in Italy, according to the Purchasing Managers’ Index, a closely followed industry barometer.
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According to the PMI index, European manufacturing’s score as a whole was 49.3. A score above 50 indicates growth, while below shows contraction.
Earlier figures from Germany, Europe’s largest economy, showed factory growth contracted for a second month. France’s manufacturing PMI showed growth slowed sharply while Spain’s went below 50 for the first time in over five years.
“Euro area manufacturing is in its deepest downturn for almost six years, with forward-looking indicators suggesting risks are tilted further to the downside as we move into spring,” said Chris Williamson, chief business economist at IHS Markit.
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New orders fell at the fastest rate in almost six years, backlogs of work were run down, purchases of raw materials were curtailed and hiring remained weak.
“In addition to widespread trade war worries, often linked to U.S. tariffs, and concerns regarding the outlook for the global economy, companies report that heightened political uncertainty, including Brexit, is hitting demand and driving increased risk aversion,” Williamson said.