Sinking German exports contribute to manufacturing contraction - PMI
BERLIN, (Reuters) - Slumping exports contributed to the second successive monthly contraction in Germany's manufacturing sector in February, a survey showed on Friday.
Markit's Purchasing Managers' Index (PMI) for manufacturing, which accounts for about a fifth of the economy, fell to a 74-month low reading of 47.6, down from 49.7 in January.
It was the second successive time that the index fell below the 50.0 mark that separates growth from contraction.
The data highlighted Germany's vulnerability to trade hostilities between the United States and both China and the European Union given its over-dependence on exports.
Trade tensions and the risk of Britain leaving the European Union this month without a deal have hit exporters in Europe's largest economy, which posted its weakest growth rate in five years last year.
The economy has been relying on consumption for growth. A robust labour market, rising wages and low interest rates have been supporting the consumption-driven cycle.
The PMI survey indicated that even though output fell for the first time in almost six years, manufacturers continued to hire new staff, which would support private spending and provide impetus to a slowing economy.
"Although manufacturers are expecting a tough 2019 – given the uncertainty around Brexit, the threat of trade wars and the concerns around a slowdown...strategic planning for further ahead has seen the rate of employment growth in the goods-producing sector remain strong," said Markit's principle economist Phil Smith.
(Writing by Joseph Nasr; Editing by Toby Chopra; Joseph.Nasr@thomsonreuters.com; +49 172 678 5836; Reuters Messaging: joseph.nasr.thomsonreuters.com@reuters.net)
