Eurozone manufacturing activity slumped to a three-year low in July, with an economic downturn across the single currency area dragging down star performer Germany, new survey data showed on Wednesday.
The Purchasing Managers Index (PMI), a survey of 3,000 eurozone manufacturers compiled by Markit research firm, fell to 44.0 points in July, down from 45.1 points in June. A score below the neutral 50 mark indicates contraction.
The index has now fallen over 12 consecutive months to hit a 37-month low with Markit warning that rates of manufacturing decline in Germany, France and Spain were "either at or close to the steepest since mid-2009."
"The eurozone faces a deepening slide back into recession," said Markit chief economist Chris Williamson citing faster rates of decline in output and new orders translating into staffing reductions and cuts to inventory holdings.
"Rates of decline hit the fastest for three years or more in Germany and France, but Spain and Greece continue to stand out in seeing particularly disappointing performances," Williamson added, with only Ireland bucking the trend.
Christian Schulz of Berenberg Bank in London said domestic demand in Germany and France was "relatively resilient," but weak demand from European crisis countries was hitting hard.