IHS Markit chief economist Chris Williamson warned a gloomy outlook for the global economy and fears around impacts from Brexit are continuing to hit business output and confidence.
He said: “Euro area manufacturing is in its deepest downturn for almost six years, with forward-looking indicators suggesting risks are tilted further to the downside as we move into spring.
“Most worrying is the downward trend in new orders. Orders are falling at a faster rate than output to a degree not seen for seven years, meaning production is likely to be pared back further in coming months unless demand revives.
“The new orders to inventory ratio has also fallen to its lowest since 2012, with many companies reporting excess warehouse stocks.
“In addition to widespread trade war worries, often linked to US tariffs, and concerns regarding the outlook for the global economy, companies report that heightened political uncertainty, including Brexit, is hitting demand and driving increased risk aversion.”
Ulas Akincilar, head of trading at online trading platform INFIX, warned the chances of Europe plummeting towards an “outright decline” are increasing all the time.
He said Europe can no longer piggyback on Germany’s long history of manufacturing strength and growth.
Mr Akincilar warned: “For years, European manufacturing was much like the football World Cup – there was always a sense of the inevitability of German triumph. No longer.
“Germany’s manufacturers have been hit by a triple whammy of falling Chinese demand, concerns over a hard Brexit and increasing protectionism.
“In a country where exports make up half of GDP, this has skewered business confidence. Germany’s manufacturing PMI score is now the lowest it has been for more than six years, and its plunge in confidence has proved contagious.
“Across Eurozone manufacturing as a whole, both output and confidence slipped into negative territory in February.
“With economic growth sputtering in the bloc, fears that the slowdown could morph into an outright decline are sounding increasingly credible.”
The latest downbeats readings are the latest financial blow for Germany, with US President Donald Trump reportedly considering slapping German cars with huge 25 percent tariffs.
Exports make up nearly half of Germany’s economic output and according to data from the Federal Statistics Office, cars are by far the country’s main export with annual sales worth £200billion.
The most valuable export destination for German cars in 2018 was the US, with revenues of £23.4billion.
Germany is also hugely concerned about a no-deal Brexit, which would see Britain falling back to the status of a this country under the rules of the World Trade Organisation.
This would push up British import tariffs for German cars to around 10 percent, and for trucks and pick-ups, tariffs of up to 22 percent would apply.
A spokesman for the VDA industry association said: “A no-deal scenario would be serious and entail significant risks for companies and employees in the EU-27.
“Massive impairments in logistics and high customs costs would be the result.”
Additional reporting by Monika Pallenberg.