A report has shown that private sector activity in the euro zone was weaker than forecast in June, hitting a 20-month low level with recoveries slowing in Germany and France.
The data showed that output fell in Italy and Spain while Ireland continued to record a 'very modest' pace of expansion, according to the Purchasing Managers' Index (PMI) compiled by research firm Markit.
'Over the past two months, the region has seen the sharpest slowing in growth since just after the collapse of Lehman's in late-2008,' said Markit chief economist Chris Williamson.
The PMI, a survey of 4,500 companies in service and manufacturing in the euro zone, fell to 53.3 points in June from 55.8 in May. A first estimate last month had forecast 53.6 points for June. Despite the fall, the index remains above the 50-point mark indicating growth.
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. But economists say the single currency area, scrambling to contain a debt crisis in Greece, will struggle to retain that pace of growth.
'The further loss of momentum in June bodes ill for the third quarter and suggests that growth may weaken further unless order books improve,' Williamson said.
The manufacturing sector saw a sharp drop, from 54.6 in May to 52 points in June, while services also slowed from 56 to 53.7 points.
