By Tuba Sahin
ANKARA (AA) - Germany's manufacturing sector contracted in July for the first time in over two years as the recent downturn in new orders deepened, according to a report released on Monday.
The S&P Global's final Manufacturing Purchasing Managers' Index (PMI) index fell to 49.3 in July, down from 52.0 a month ago and below the 50 no-change threshold for the first time since June 2020.
New orders declined the most since May 2020 due to a drop in investment spending, elevated prices, high stock levels at customers, and continued supply chain frictions.
Production levels across the sector slipped for the third time in the past four months in July.
Business expectations were the lowest since May 2020 as manufacturers are concerned over high inflation, waning demand, continued supply chain disruption, a potential energy crisis, and the prospect of recession.
"The potential for a shortage in gas supplies has German manufacturers seriously worried about the outlook for production in the coming year," said Phil Smith, economics associate director at S&P Global Market Intelligence.