A key indicator of euro zone private sector growth slowed in June to its weakest level in 20 months, dragged down by a sharp slowdown in manufacturing activity.
'The euro area's economic growth surge has lost momentum at a worrying rate in the past two months,' said Chris Williamson, chief economist at Markit, the research firm that surveys 4,500 businesses in the 17-nation euro zone.
The Purchasing Managers Index fell to 53.6 points in June from 55.8 points the previous month, its weakest performance since October 2009. Despite the fall, the index remains above the 50-point mark indicating growth.
The manufacturing sector saw a sharp drop, from 54.6 in May to 52 points in June, while services also slowed from 56 to 54.2 points.
'Even German manufacturing, the driving force of the region's recovery, has seen a marked deterioration in output and new orders growth - linked to a large extent to a severe weakening of export order book growth,' Williamson said.
'Meanwhile, the euro area excluding France and Germany has fallen back into contraction for the first time since late-2009,' he said.
The euro zone posted growth of 0.8% in the first quarter, picking up steam after a mere 0.3% in the last three months of 2010. Economists say the single currency area, scrambling to contain a debt crisis in Greece, will struggle to retain that pace of growth.
