Eurozone rocked by faltering factories

MANUFACTURING has slumped again in the eurozone’s biggest economies, sparking fresh fears that the bloc is heading for a crisis.

Factory output fell in Germany, France and Italy as demand was hit by a crackdown on trade by the US government, falling demand for diesel cars and a darkening picture for the global economy.

By contrast, UK manufacturers clocked up their best performance for 13 months as they build stockpiles at the fastest rate on record to avoid disruption from Brexit.

In Germany, the powerhouse of the single currency area, manufacturing output hit its lowest level since July 2012 when the eurozone debt crisis was in full swing.

A survey of manufacturing by researcher IHS Markit recorded a reading of 44.1, where anything below 50 means output is shrinking.

The situation could get worse. Orders for new German goods fell at their steepest rate since 2009, and employment in the sector dropped for the first time in three years.

French manufacturers suffered their first contraction since December, with a reading of 49.7, as the country struggles with both a gloomy worldwide situation and weekly ‘yellow-vest’ riots at home.

And Italy – which entered recession last year – suffered its eighth straight manufacturing decline with a reading of 47.4. The UK recorded a score of 55.1.

Across the eurozone, manufacturers’ confidence has fallen to its lowest level for more than six years.

Along with the US trade row, which has harmed global exports, the sector has also been hit hard by a slump in demand for diesel cars over fears about pollution.

It is feared the slowdown will do lasting damage to the eurozone economy and impact Britain too.

Chris Williamson of Markit said: ‘The trend could clearly deteriorate further in the second quarter.’

he added that firms are cutting costs and shrinking their workforces in a sign th e picture is not expected to improve any time soon.

Unemployment in the bloc stands at 7.8pc, unchanged on the previous month and its lowest level since 2008. This is twice the 3.9pc in the UK, its lowest since January 1975.