Euro-Area Factories See Orders Weakening as U.K. Demand Falters

New orders at euro-area factories rose at the weakest pace in 18 months in August as both domestic and export demand faltered amid heightened uncertainty after the U.K. voted to quit the European Union.

A Purchasing Managers Index for manufacturing fell to a three-month low of 51.7 in August from 52 in July, IHS Markit said Thursday. The decline, which was steeper than initially estimated, was driven by a slowdown in order growth. The measure remained above the 50 level that divides expansion from contraction.

“Euro-zone manufacturers reported a wavering performance in August, with signs that growth could slow further in coming months,” said Chris Williamson, chief business economist at IHS Markit. “Anecdotal evidence suggests that the strengthening of the euro and reduced sales to the U.K. were partly to blame for the order-book slowdown.”

Markit said that slower order inflows signal that the U.K. Brexit vote might be feeding through to the region’s economy. The report comes a week before the European Central Bank’s Governing Council reconvenes to decide on what path to take for further policy action.

While manufacturing in six of the eight economies covered by the survey expanded, with Germany and the Netherlands leading the way, the overall index was dragged lower by a continued downturn in France, and Italy’s first contraction since January


Job creation also took a hit, the survey showed, with only Ireland seeing an acceleration in hiring.

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