Manufacturing activity in the euro zone contracted in June for the first time for three years, according to a survey today.
The euro zone's purchasing managers' index (PMI) for the manufacturing sector, compiled by data and research group Markit, slid to 49.2 points in June, from 50.6 in May, up slightly from an initial estimate of 49.1.
With manufacturers struggling with the euro's strength, high commodities prices and weakening export markets, the fall brought the index below the 50 point level indicating a contraction in activity for the first time since mid-2005.
Analysts said that the weakness in manufacturing activity in June was widespread across the euro zone. German activity slowed to its second-lowest level since September 2005, although it remained well in expansion territory.
However, the PMI pointed to contracting activity in Ireland, France, Italy, Spain and Austria and Ireland. Activity was particularly weak in Spain and Ireland, adding to the deepening gloom on these economies, they added.
Meanwhile, the unemployment rate in the euro zone held steady in May for the sixth month running at a record low point of 7.2%, according to the latest official EU data.
The unemployment rate, which the European Union's Eurostat data agency adjusted to take seasonal variations into account, is the lowest on its books going back to 1993.
Eurostat had originally reported that unemployment in the bloc was at a new record low point of 7.1% in April, but revised the figure up in a second estimate after several member states updated their calculation process.
While the euro zone economy has slowed over the past year, unemployment has seen a gradual decline in the bloc although the fall has recently stalled. The jobless rate was down from 7.5% in May 2007.
Long a major headache for euro zone politicians, unemployment in the euro zone has gradually eased in recent years since peaking at 9.1% in March 2005.
In the 27-nation EU as a whole, the unemployment rate ticked up in May to 6.8% from 6.7% in April, but was down from 7.2% in May 2007.
Eurostat estimated that 16.17 million workers were without a job throughout the EU, including 11.20 million in the euro zone.