Germany’s Economy Continues to Falter, Spelling Trouble for the Eurozone

October 24, 2019

Europe’s economic powerhouse continues to struggle as global trade issues weigh on the manufacturing sector. German manufacturing PMI inched up to 41.9 in October, a slight increase over September’s 41.7, which was the lowest reading in a decade. Despite the small uptick, the PMI remains well below 50, which indicates a contraction.

More worrying is that the weakness in the German economy seems to be spilling over from manufacturing to other sectors. German services PMI fell to its lowest level in over three years. Manufacturing makes up nearly half of Germany’s GDP, so a prolonged downturn there could eventually be felt in the rest of the economy. The early signs of weakness in the services sector have some analysts worrying that the nation may be heading for a recession. Germany accounts for about a quarter of the Eurozone’s economic activity, so there are concerns that a recession there could harm growth throughout the entire region.

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