According to the report from IHS Markit, the euro area’s manufacturing sector continued to contract during July, and at an accelerated rate. 

The latest Eurozone Manufacturing PMI posted below the 50.0 no change mark that separates growth from contraction for a sixth successive month and, at 46.5, pointed to the sharpest deterioration in operating conditions since December 2012. The index was down from 47.6 in June, though slightly higher than the earlier July flash reading of 46.4.

The downturn in the overall manufacturing economy was driven in the main by a sharp fall in new orders. Latest data showed that the decline was the second sharpest recorded by the survey in just over six years (surpassed only by a contraction in March). Export trade deteriorated to the greatest degree since November 2011. A deteriorating trend in order books led to a retrenchment in both production and purchasing activity amongst euro area manufacturers. Output was cut to the greatest degree since April 2013, whilst the reduction in purchasing activity was the sharpest seen since the end of 2012. 

July’s survey data indicated a sharp fall in sentiment to its lowest level since the end of 2012. Germany recorded by far the most pessimistic outlook for production over the next 12 months.