On Monday, credit ratings agency Moody’s lowered its outlook for Germany, Netherlands and Luxembourg.
“The German manufacturing sector has been one of the key elements of the eurozone recovery and to see it contracting at this rate is really quite worrying,” said Chris Williamson, chief economist at Markit.
Markit’s composite Purchasing Managers’ Index (PMI), which combines both the services and manufacturing sectors, was unchanged at 46.4 in July. Any reading below 50 suggests a contraction.
The reading for Germany’s manufacturing activity was 43.3, a 37-month low.
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