German manufacturing activity recorded the worst performance in seven years in the month of July, the latest manufacturing activity report from IHS/Markit research showed this Wednesday.

The German manufacturing purchasing managers index (PMI) arrived at 43.1 versus 45.0 expected and 45.2 previous. Meanwhile, services PMI hit a two-month low level of 55.4 as against previous months reading of 55.8 and 55.3 anticipated.

The IHS Markit Flash Germany Composite Output Index came in at 4-month lows of 51.4 in July vs. June’s 52.6 and 52.3 expectations.

Key comments from Phil Smith, Principal Economist at IHS Markit:

“The health of German manufacturing went from bad to worse in July, according to the flash PMI data, raising the risk of the euro area’s largest member state entering a mild technical recession.”

“The performance from Germany’s goods producers in July is the worst recorded by the survey in seven years, with the renewed weakness mainly stemming from an accelerated drop in export orders – the most marked seen in over a decade.”

“In a further sign of the slowdown in new orders and gloomier outlook affecting firms’ hiring decisions, July’s flash data showed employment rising at the slowest rate for over four years, with factory job losses accelerating.”

On the German PMI disappointment, the selling pressure around the EUR intensified, with EUR/USD hitting fresh two-month lows at 1.1128.