April 23 - Germany's manufacturing sector unexpectedly shrank at the fastest pace in nearly three years in April, casting a shadow over upbeat business sentiment. Ciara Sutton reports.
Data out of Germany has dented hopes that the country can drive growth in the euro zone. Manufacturing in April unexpectedly shrank at the fastest rate since 2009. Markit's manufacturing Purchasing Mangers Index estimates a monthly fall of more than two points to 46.3. That's well below the 50 mark which would signal growth. Exports have declined as the euro zone debt crisis has choked demand from key trading partners. Markit Economist Rob Dobson: (SOUNDBITE) (English) MARKIT ECONOMIST, ROB DOBSON, SAYING: "Given the importance of manufacturing to Germany and to German growth, that's also a worry for Germany going ahead. But also other indexes, such as the New Export Orders Index, they're weaker. Exports are major to Germany, and major to German employment. So if they are continuing to fall sharply, that's a worry going ahead." Concerns over the finances of big euro zone economies such as Spain and Italy have unsettled markets in recent weeks. In February, German industrial orders rose less than expected, although demand from non-European countries provided some momentum. German companies say they expect challenging times ahead, with Volkswagen saying it's braced for a "demanding year". The PMI's composite index also fell slightly to 50.9, hovering just above stagnation. And employment fell for the first time in more than two years. There was some good news though - growth in the services sector increased slightly. But the euro fell to a session low against the dollar after the disappointing data. Ciara Sutton, Reuters