Manufacturing in the euro zone expanded in July at the weakest rate since the 2009 recession, adding to concerns over world economic growth.
The latest survey of company purchasing managers (PMI) showed that in Germany, which has been the euro zone’s key engine of recovery so far, manufacturing growth fell to its lowest in 21 months.
That came after new orders contracted for the first time in more than two years.
China’s official government PMI also dropped to its weakest in more than two years.
China was the main engine of growth as the developed world sank into recession after the 2008 financial crisis and signs of a slowdown there would worsen the global outlook at a time when both the US and European economies are struggling with debt crises.
Emerging market are also taking a hit. Indian manufacturing growth slowed in July for the third month in a row.
“At the global level, the manufacturing cycle is taking a turn for the worse,” said Silvio Peruzzo, an economist at RBS in London.
“It’s not a euro area story, it’s a broad-based story. Look at China, look at other advanced economies — clearly the manufacturing cycle has taken a turn which was more pronounced that was probably anticipated.”
Peruzzo said for the euro zone at least, it might take a couple more months to draw conclusions about whether the slowdown is of a transitory nature, or whether another recession was on the way.
In some cases, like Greece, economies are already contracting.