Manufacturing activity in Germany shrinks for the eighth consecutive month in August, according to IHS Markit. Overall business confidence has declined, with orders reporting a third drop in the last four months. The PMI in the industry reached 51.4 points, its lowest level in the last six years.

“Germany remains a two-speed economy, with continuous growth in services barely managing to compensate for the continuing weakness in production”, commented IHS Markit economist, Phil Smith. According to him, the latest survey data do not dispel the threat of another slight contraction of gross domestic product in the third quarter.

According to the report, the number of companies that expect production to decline in the next 12 months exceeds those who forecast an increase for the first time in nearly five years. Although job growth in the services sector is still stable, employment in manufacturing has been declining at the fastest pace in the last seven years.

Germany’s GDP declined in the April-June period, with continued trade tensions and slowing Chinese demand not giving good hope that the Eurozone will recover later this year. Bankers from the European Central Bank are expected to lower interest rates at their next meeting in three weeks.