Financial markets around the world have fallen sharply in the midst of rising fears of a slowdown in the world economy, after euro area production fell rapidly in almost six years.
Friday's losses on stock exchanges across Europe and on Wall Street came after the figures suggested economic growth across the European single currency block remained weak in the first quarter of 2019, leaping hope of a rebound from a weak end to last year.
Economists said the poor readings of industrial production probably reflected a slowdown in China and the world economy, increasing the prospect that growth for the rest of 201
New York fell, with the Dow Jones industrial average closing 460 points or 1.8%, while the FTSE 100 fell by 2% and markets across Europe also took steep losses.
IHS Markit flash purchasing manager's index for manufacturing production in the euro area used to identify early warning say Because of financial stress, production in March showed the most since December 2012 – a period when the euro area was hit by the sovereign debt crisis.
Analysts said that disturbances for Brexit companies had an impact, but the declining demand for exports in the US-China trade conflict had a more damaging effect.
Germany's manufacturing sector, which is increasingly geared to selling goods to China in recent years, recorded the sharpest decline in production for seven years. New factory orders have deteriorated to the greatest extent since the financial crisis.
Much of the problems for the German industry are linked to China's slow economy, after Donald Trump imposed import duties on Chinese goods in a bitter trade commodity with Beijing. Chinese car sales fell for the first time in almost 30 years last year, in battle against several German car manufacturers, which count on China as their largest export market. Germany only managed to avoid recession last year.
The PMI, compiled by surveying 5,000 companies across the euro area, showed that Germany and France were the worst artists. Other parts of the euro area recorded stronger growth.
Chris Williamson, Chief Financial Officer of IHS Markit, said the survey pointed to GDP growth of approx. 0.2% in the opening quarter.
Andrew Kenningham, economy of the European economy at the Capital Economics Advisory, said: "The big picture is that the euro area economy remains much in the slow path, with the German production recession and a major downturn in Italy pulling down the region. "