The Eurozone sank further into decline at the start of the fourth quarter, with the combined output of the manufacturing and service sectors dropping at the fastest rate since June 2009. The Markit Flash Eurozone PMI Composite Output Index fell for a third successive month, down from 46.1 in September to 45.8 in October. Output has fallen continually since September of last year with the exception of a marginal increase in January. Output continued to fall in response to a further marked contraction in new orders. The rate of decline in new business eased slightly since September, which had seen the largest drop since June 2009. Eurozone firms continued to cut employment, adjusting capacity down in response to lower levels of demand for goods and services. The overall rate of job losses eased slightly, but remained close to the 32-month record seen in September. Further declines in activity over the coming year were signalled by another deterioration in business optimism in the service sector, which also suggests that employment looks likely to be cut again. Service providers were the gloomiest about the 12-month outlook than at any time since February 2009. Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said, ''The Eurozone has slid further into decline at the start of the fourth quarter. The survey is running at a level which is historically consistent with the region's economy contracting at a quarterly rate of over 0.5%. Official data have shown surprising resilience over the summer compared to the survey data, but the underlying business climate has clearly deteriorated markedly in recent months. While GDP may decline only modestly in the third quarter, a steeper fall looks to be on the cards for the fourth quarter.'' “The financial markets may have cheered the positive developments from policymakers in seeking to resolve the region's debt crisis, notably the promise of bond market intervention by the ECB, but business appears to have been less impressed. Sentiment about prospects for the year ahead are now the gloomiest since early-2009, when the post-Lehman Brothers crisis was in full swing. In addition to worries about the health of domestic markets, companies are also seeing demand weaken further afield, notably in Asia and, to a lesser extent, the US.'' ''Worries about the outlook have translated into further job losses, suggesting companies are moving increasingly into cost-cutting mode. Even Germany is not immune, with October seeing the first back-to-back monthly fall in employment since early-2010.''

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