Germany’s manufacturing sector expanded at the slowest rate in 11 months in August as new orders and output growth weakened, a survey showed on Monday, adding to signs that Europe’s largest economy is slowing.

Markit’s Purchasing Manager’s Index (PMI) for the manufacturing sector, which accounts for about a fifth of the economy, fell to 51.4 - its weakest reading since September last year - from 52.4 in July.

While it remained above the key 50 threshold which separates growth from contraction, it was below the flash reading of 52.0 published on Aug. 21.

"Warning lights are flashing in Germany's goods-producing sector," said Markit economist Oliver Kolodseike, adding that the sector's recovery could be at risk if factories continue to cut jobs and reduce their buying activity.

“The survey data suggest that manufacturing appears to be in the midst of a slowdown, with output and new order growth slowing to only marginal rates that were well below the levels seen at the beginning of the year.”

Factories shed staff for the third consecutive month as new domestic and foreign orders flowed in slower than in July and output increased less sharply.

Manufacturing firms also made fewer purchases, suggesting they are downbeat about their future prospects. But their margins got a boost as input prices dropped for the seventh month in a row while output prices increased.

Reuters