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. Last Updated: 07/27/2016

European Manufacturing Falters as Currency Rises

LONDON -- The manufacturing industry in the 12 nations sharing the euro expanded at the slowest pace in 14 months in November as higher oil prices and the euro's increase to a record against the dollar crimped exports.

An index based on a survey of about 3,000 purchasing managers compiled by NTC Research for Reuters Group fell to 50.4 from 52.4 in October, according to figures on the Internet. Economists expected a decline to 52, the median of 39 forecasts in a Bloomberg survey showed. A reading above 50 shows expansion.

The euro region's economic recovery is faltering as the currency's 10 percent rally against the dollar in the past three months makes exports more expensive and higher oil prices boost companies' costs. DaimlerChrysler the world's fifth-largest carmaker, said last week the euro will hurt profit.

"The weakening of growth that we're seeing is very disappointing," said Ulrich Scheinost, chief economist at the Frankfurt-based ZVEI electrical and electronics industry association, whose 1,400 members include Siemens. "It doesn't seem like the dynamism we've seen from exporters is helping domestic growth yet, and the euro and the oil price are endangering this process even more."

In Germany, Europe's biggest economy, manufacturing contracted for the first time in 15 months, with the purchasing managers index dropping to 49.9. In France, the index declined to 52.2 from 53.5 and in Italy, the third-largest economy in the euro region, manufacturing also contracted.

"It's worrying that manufacturing in Germany has collapsed," said Julien Seetharamdoo, an economist at Capital Economics in London. "The report is extremely disappointing and suggests the euro-zone recovery is now very feeble."