LONDON (Reuters) - Manufacturing activity in the euro zone contracted at its steepest rate in almost seven years last month, according to a survey on Tuesday that suggested there would not be a turnaround any time soon.
IHS Markit's September final manufacturing Purchasing Managers' Index (PMI) was 45.7, just above an earlier flash reading of 45.6 but its lowest since October 2012 and well below the 50 level separating growth from contraction.
An index measuring output which feeds into a composite PMI due on Thursday and seen as a good gauge of economic health, sank to 46.1 from 47.9. That was its lowest since December 2012 and marked its eighth month below the break-even level.
"The health of the euro zone manufacturing sector went from bad to worse in September. There's likely worse to come, with forward-looking indicators deteriorating further during the month," said Chris Williamson, chief business economist at IHS Markit.
An index measuring new orders fell to 43.4 from 45.9, a low not seen since October 2012. This led firms to cut headcount for a fifth month and reduce their purchases of raw materials.