Mark Elias/Bloomberg

German Manufacturing Growth Slowed in July as Exports Decline

German manufacturing growth unexpectedly cooled in July as exports fell for the first time in six months.

Markit Economics said on Friday its factory index slipped to 51.5 from 51.9 in June, missing economists’ forecast for an unchanged reading. An export index fell below the key 50 level for the first time since January, indicating a contraction.

A services gauge also fell in July, to 53.7 from 53.8, while a composite index of both sectors slipped to 53.4 from 53.7. Economists had forecast 53.9.

While manufacturing momentum has been weak this year and sentiment has declined, recent signs of progress in the Greek crisis suggest potential for a revival in coming months. Low unemployment and wage growth are fuelling consumer spending and helping to drive Germany’s economic expansion, according to the Bundesbank.

The data “signal further modest, but unspectacular growth in Germany’s private sector,” said Oliver Kolodseike, an economist at Markit. While the report signals a slowdown, it still suggests that the Greek debt crisis “isn’t showing any meaningful negative effects on companies in the euro zone’s largest member state so far,” he said.

Germany’s economy grew 0.5 percent in the second quarter, according to a Bloomberg survey, and is forecast to maintain that pace for the rest of the year. The Bundesbank raised its 2015 growth outlook last month to 1.7 percent.

In its report, Markit said the composite measure of new orders rose in July and companies “continued to expand their workforce numbers at a healthy rate.”

In an earlier report, Markit said France’s economic recovery lost momentum at the start of the third quarter. Its composite index for the economy fell to 51.5 in July from 53.3 in June, which was the highest in almost four years. Economists had forecast the gauge would remain unchanged.

France’s manufacturing index dropped to 49.6 in July from 50.7 in June, while the services measure fell to 52 from 54.1.

Markit’s composite index for the 19-nation currency bloc probably slipped to 54 from 54.2. Markit will publish that report at 9 a.m. London time.

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