A hesitant recovery in euro zone manufacturing went into reverse in September as gloom about global recovery prospects depressed new orders and firms cut output and jobs, a survey showed today.
The Reuters Eurozone Purchasing Managers' Index fell through the critical 50 line that divides growth from shrinkage to 48.9 in September from 50.8 in August as German manufacturing slipped deeper into contraction and recovery halted in France and Italy.
Falling orders and output and faster job cuts pushed the index down to its lowest level since February and below the consensus forecast of 50.3.
"It's not good news and a lot of questions are being asked about the recovery," said Mr Mark Wall at Deutsche Bank in London.
European manufacturers shed more jobs than they created for the sixteenth month running and the employment index fell to 46.7 in September from 47.4, the fastest rate of decline since February.
Economists said the PMI data increases the chances that the European Central Bank will cut official benchmark interest rates, currently at 3.25 per cent.