German manufacturing grew at the slowest pace in 16 months in March, evidence that the economy is feeling the pressure of cooling global demand.
Markit Economics said its Purchasing Managers Index slipped to 50.4 from 50.5 in February, just above the 50 level that separates expansion from contraction. While a separate report showed services improved this month, a gauge of new business across both sectors declined to the lowest in eight months.
“It looks as if momentum in the German economy will remain sluggish in the months ahead,” said Oliver Kolodseike, an economist at London-based Markit. The PMI results are “indicative of moderate, although unspectacular GDP growth, similar to the rates seen during the last two quarters.”
The Bundesbank said on Monday that Europe’s largest economy will probably maintain its “solid rate of expansion” this quarter, but there may be a slowdown in the next three months. It highlighted weak factory orders and a deterioration in business expectations.
Sentiment in Europe’s largest economy has suffered recently amid concern about slowing global growth and market volatility. Markit said its services gauge for Germany rose to 55.5 this month from 55.3. A composite measure of both sectors was unchanged at 54.1.
In France, the composite activity measure rose to 51.1 in March from 49.3 in February, lifted by services. Markit’s euro-area index will be published at 9 a.m. London time. Economists forecast that the composite index remained at 53 this month.
By Fergal O’Brien and Alessandro Speciale