German industry sinks in global downturn

German manufacturing activity slumped to a three-year low in July, dragged down by uncertainty over the eurozone and slowing global demand. Analysts say the pace of industrial decline is the fastest since 2009. The Purchasing Managers Index (PMI) for Germany fell to 43 points in July, down from 45 points in the month before, reflecting "the most dramatic downturn of German industry in a single month," the Markit research group said on Wednesday. The PMI is a monthly barometer of economic activity, compiled by the London-based market research firm from surveys of 3,000 eurozone manufacturers, including 500 in Germany. A score below the 50-point mark indicates economic contraction. "Not just production [in Germany] slumped to a three-year low in July, but industrial jobs, too, were reduced at a pace unseen since 2010," Markit economist Tim Moore told the Reuters news agency. In addition, Markit pointed out that new orders for German industry had slumped for 13 consecutive months now, which was "the longest stretch of declining factory orders in Germany" since the PMI was first compiled in 1996. Markit attributed the German PMI drop to lower demand from Asia and the United States, where companies were "increasingly reluctant" to invest in new machines in view of a slowing global economy. However, cost pressures in July had eased, Markit said, as commodity prices had slumped at the fastest pace since 2009. Alongside Germany, eurozone countries France, Spain and Greece stood out in seeing "particularly disappointing" PMI readings, Markit said. In July, the PMI for the whole of the eurozone dropped to 44.0 points from 45.1 points in June. This constituted the 12th consecutive month of industrial decline in the common currency area, to hit a 37-month low, Markit said. "The eurozone faces a deepening slide back into recession," Markit chief economist Chris Williamson told a news conference Wednesday.