The euro-zone's private sector contracted at a faster pace in October, highlighting a growing risk that the region could slip back into recession, Markit's preliminary October purchasing managers index showed on Monday.
Concerns over the region's sovereign-debt crisis are now affecting Germany and France as well as the region's smaller southern European states.
The preliminary composite PMI for the euro zone fell to 47.2 in October, the lowest level since July 2009 and from September's 49.1.
The October manufacturing PMI slid to 47.3 from September's 48.5, and the services PMI fell to 47.2 from 48.8 over the same period, according to Markit's data.
A level above 50 signals an expansion in activity, while a level below 50 signals a contraction.
"All in all this is a miserable report, highlighting the fact that the euro zone is falling into recession again," said Peter Vanden Houte, an economist at ING.
The figurers were worse than analysts expected. A Dow Jones Newswires survey of economists last week found the average forecast was for the composite measure to fall to 48.8, the manufacturing to drop to 48.0 and the services PMI to decline to 48.5.
"The PMI signals a heightened risk of the euro zone sliding back into recession," said Chris Williamson, chief economist at Markit. "Forward-looking indicators such as the further lowering of expectations of services growth in the year ahead, and the near-stalling of job creation, suggests companies are bracing themselves for the situation to continue to deteriorate."
The French composite PMI fell to an almost two-and-a-half-year low of 46.8 in October as service-sector activity slumped sharply. Business confidence also tumbled, with a further decline in new orders adding to the weakening outlook, Markit said.
And while the composite PMI for Germany rose to 51.2 in October, that masked a steep drop in the manufacturing sector. Once again new orders fell in October and by similar levels across both the services and manufacturing sectors.
"Worries related to the euro-zone debt crisis were widely cited by firms as having a negative influence on business conditions, with the uncertainty causing clients to delay investment decisions and cut back on non-essential spending," said Tim Moore, a senior economist at Markit.
The euro-zone PMIs are based on data from Germany, France, Italy, Spain, Ireland, Austria, Greece and the Netherlands.
Separately, the European Union's statistics agency Eurostat said factory orders in the 17 countries that share the euro rose at a weaker pace again in August, as demand for goods eased across much of the region.
New industrial orders rose 1.9% from a month earlier and grew just 6.2% from a year earlier.
The annual increase was the lowest since a 2.8% drop in November 2009, Eurostat said. The monthly increase, meanwhile, was the first since May this year.
The August data compare with July's 1.6% drop on a month-to-month basis and an 8.9% increase from a year earlier.
Orders are a forward-looking indicator of industrial activity as they give an idea of the level of new business coming in. The August data suggest official output was likely subdued in the third quarter.
The official Eurostat data are less timely than the purchasing managers indexes for the region compiled and published by financial data firm Markit.
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