Germany's manufacturing sector grew at its slowest pace in 21 months in September, as weak expansion in new orders weighed heavily.
The NTC/BME purchasing managers' index (PMI) fell to a seasonally-adjusted 54.9 last month, the lowest since December 2005 and just below the 55.0 economists predicted.
A gauge of new orders slipped to a two-year low of 53.4 from 57.2 the previous month, NTC said. A reading above 50 indicates growth and below 50 contraction.
NTC economist Tim Moore said the sharp moderation in new order growth was a first sign that recent credit market turmoil had dented demand in the German manufacturing sector.
Confidence among firms and investors in the outlook for the German economy has waned in recent weeks. Turbulence in financial markets, surging oil prices and the euro's rise to a record against the US dollar have all stirred growth fears.
"Output and new orders continued to rise at robust rates in the intermediate and investment goods sectors," NTC said. "In contrast, consumer goods producers reported marked reductions of production and incoming new work."
Price pressures eased significantly last month, the survey showed, with a measure of output prices falling to 51.5, the lowest since February 2006, from 52.1. A gauge of input costs declined to a two-year low of 58.3 from 61.3.
Although the orders gauge declined in September, it remained above 50 for a 25th straight month, which firms generally attributed to a rise in new business from abroad, NTC said.
Job creation at German manufacturers continued at a robust pace in September. The employment index rose to 54.9, the highest since June, from 53.8 in August.