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Eurozone manufacturing growth slows in August, optimism slides on trade concerns

Manufacturing growth in the eurozone slowed to its lowest level since November 2016 despite an improvement in output as new orders growth slowed to a two-year low, according to IHS Markit.

The final IHS Markit eurozone manufacturing purchasing managers' index came in at 54.6 in August, unchanged from the flash estimate and down from 55.1 in July.

"The slowdown in demand compared to the surging pace of expansion seen earlier in the year is being driven primarily by export orders rising at the slowest rate for nearly two years," said Chris Williamson, chief business economist at IHS Markit. "Some of the slowdown in exports can be attributed to the appreciation of the euro since earlier in the year, but companies are also reporting signs of demand cooling and risk aversion intensifying."

Factory selling prices rose at their slowest pace in a year and input cost inflation eased to a three-month low. Job creation fell to its lowest level in 1.5 years.

Concerns about global trade tensions and the possibility of further tariff impositions also weighed on business expectations, which dropped from July to the second-lowest level since November 2015, IHS Markit said.

The headline IHS Markit/BME Germany manufacturing PMI fell to 55.9 in August from 56.9 in July. Manufacturing growth in Germany slowed to its lowest level in 1.5 years as new order growth slowed due to the weakest rise in new export orders in more than two years.

The IHS Markit France manufacturing PMI increased slightly to 53.5 in August from 53.3 in July as growth momentum improved in the manufacturing sector due to faster increases in output and new business volumes. The headline IHS Markit PMI for Italy decreased to 50.1 in August from 51.5 in July.