(Bloomberg) -- The euro zone’s continued demand for factory jobs is a mystery that may be the only thing staving off a recession right now.

Manufacturing in the 19-nation currency bloc has been on a downward trajectory since the start of last year. The sector hasn’t contracted this long and deeply without a recession since at least the 1960s, according to an ING analysis of European Central Bank data.

ING cites weakening global demand and trade uncertainty as significant causes of the slide, but noted a critical bright spot.

“Remarkably though, this contraction in activity has not caused employment to decline. As long as that is the case, an outright euro-one recession remains unlikely,” senior economist Bert Colijn said in a note to clients. “Employment in the manufacturing sector continues to grow, thereby supporting household consumption, which in turn mainly benefits the service sector.”

ING sees little reason for an improvement in the manufacturing sector though, with slowing exports spelling further trouble in the second half of 2019. An uptick in May’s output figures reported Friday looks unlikely to meaningfully offset previous weakness. Colijn questioned how long the industrial slump can continue without broader repercussions.

“Businesses indicate that hiring intentions in the manufacturing sector are weakening and in Germany, layoffs have increased while short-term work is returning,” he wrote. “Still, as long as overall manufacturing employment continues to grow, the sluggishness in industrial production may well remain relatively contained. The manufacturing job market could, therefore, be key in the coming months to see whether the expansion can hold out.”

--With assistance from Carolynn Look.

To contact the reporter on this story: Kristie Pladson in Frankfurt at kpladson@bloomberg.net

To contact the editors responsible for this story: Tom Contiliano at tcontiliano@bloomberg.net, Paul Gordon

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