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Eurozone manufacturing sector contracts for 7th consecutive month in August

The eurozone manufacturing sector remained in contraction territory for the seventh consecutive month in August despite an improvement in the final purchasing managers' index, following a 6.5-year low in July.

The latest PMI reading came in at 47.0 in August, in line with the Econoday consensus estimate and a preliminary estimate but higher than July's reading of 46.5, final August data from IHS Markit showed.

The latest reading, which is the second-lowest since April 2013, fell short of the 50.0 mark that separates expansion from contraction.

Order books continued to shrink, with Germany registering the steepest monthly fall, IHS Markit noted. Firms cut backlogs of work and employment, which fell for the fourth consecutive month.

The German manufacturing sector had the lowest PMI reading of 43.5 in August, up from July's seven-year low of 43.2 but trailing expectations of a 43.6 print.

Meanwhile, the French PMI rose to 51.1 in August, exceeding expectations for a 51.0 reading and July's 49.7 level.

Confidence among manufacturers in the eurozone declined to its lowest level since November 2012 in August amid concerns of a further deepening of the recent global manufacturing downturn amid trade tensions between the U.S. and China.

"The deteriorating manufacturing conditions mean the goods-producing sector is likely to act as an increased drag on eurozone economic growth in the third quarter," said Chris Williamson, chief business economist at IHS Markit. "At current levels, the survey is consistent with goods production declining at a quarterly rate of 1%."