Manufacturing activity in the euro zone contracted for the third straight month in August, as German firms reported shrinking output for the first time in three years. The PMI for the euro zone's factory sector rebounded slightly and rose to 47.6 in August from 47.4 in July, data from research group Markit Economics showed on Monday, beating expectations for a rise to 47.5. But the measure still indicated that output is shrinking (if a little more slowly) since a reading above 50 signals growth, while a level below 50 signals contraction.
The data showed that Germany and Spain recorded very sharp decreases in export orders, while employment in the currency bloc fell for the third straight month. Price pressures eased somewhat, but remained at high levels, underlining the European Central Bank's dilemma as it tries to balance high inflation levels and slowing growth across the region. Germany's PMI was revised down to 49.7 in August after 50.9 in July - marking the first contraction since the third quarter of 2005.
The French PMI fell to 45.8 in August from 47.1 a month earlier, beating expectations for a drop to 45.1.
Italy's PMI rose to 47.1 compared with 45.3 a month earlier. Spain's manufacturing PMI hit 42.4 in August compared with 39.2 in July. Manufacturing activity edged up in Spain and Ireland but remained at very low levels, with Spain's reading the third lowest in the survey's 10-year history. The euro-zone manufacturing PMI is based on data from Germany, France, Italy, Spain, Ireland, Austria, Greece and the Netherlands, which account for about 92% of the bloc's manufacturing activity
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