Manufacturing activity in the 16 countries using the euro shrank in March although not as quickly as in February, according to figures released today.
The euro zone's purchasing managers' index (PMI) for the manufacturing sector rose to 33.9 points from 33.5 points in February, slightly below a first estimate of 34.0.
Despite the modest increase, the index, compiled by data and research group Markit, remains far away from the 50-point threshold indicating that the euro zone's manufacturing base is in contraction.
Meanwhile, the level of unemployment in the euro zone hit 8.5% in February, marking its higest level in close to three years.
The unemployment rate hit the highest level since May 2006 in February as an estimated 319,000 jobs were shed across the single currency bloc.
The euro zone joblessness rate stood at 8.3% in January and 7.2% in February 2008, the European Union's Eurostat data agency said.
After gradually falling in recent years to a record low of 7.2% in March 2008, unemployment in the then 15 euro zone countries began creeping higher from April 2008 in the face of a deteriorating economic outlook.
For the 27-nation EU as a whole, unemployment rose in February to 7.9% from 7.7% in January and 6.8% in February 2008.
Eurostat said that it estimated that 19.156 million people were without a job in February across the EU, of which 13.486 million were in the euro zone.