Mubasher: Business activity in the German private sector started the third quarter with a slow growth pace, as factories in Europe’s biggest economy saw the weakest monthly since seven years, according to data released on Wednesday.

Germany’s flash composite output index came in at 51.4 in July, compared to a reading of 52.6 in June, IHS Markit's purchasing managers’ index (PMI) data showed.

“The health of German manufacturing went from bad to worse in July, according to the flash PMI data, raising the risk of the [Eurozone’s] largest member state entering a mild technical recession,” IHS Markit’s principal economist Phil Smith said.

Manufacturing output saw a steep drop in July, recording one of the biggest contraction level since 2009, as new orders, employment and inventories of purchases plunged on a more rapid tempo.

The headline IHS Markit flash Germany manufacturing PMI recorded a reading of 43.1, up from 45 in the preceding month.

Nevertheless, more resilience was seen among services providers, as business activity saw an upturn during the month, led by solid domestic demand.

Employment growth in the German private sector slowed down to its lowest since more than four years, as backlogs of work grew faster and outlook for future production waned.

By 7:56 am GMT, the EUR/USD pair declined by 0.13% to $1.1138.