Activity in euro-zone factories fell further in August as new orders dwindled, suggesting the outlook for the 17-nation economy remains poor, a survey of purchasing executives showed Monday.
The overall drop in factory output, employment and new business was less steep in August than in July, but nonetheless marks the 13th month of contraction for the sector which will drag on the economy as a whole in the third quarter.
Data company Markit said the manufacturing Purchasing Managers' Index for the 17 nations that use the euro rose to 45.1 in August from 44 in July. The latest reading remains way below the 50 break-even level, indicating a fall in activity compared with July.
Germany and France, the euro zone's two largest economies, registered a moderate easing in the rate of decline in their manufacturing sectors.
Despite such tentative signs that the downturn may be bottoming out, the near-term outlook remains poor, said Rob Dobson, senior economist at Markit.
"The final reading of the August PMI confirms that the euro-zone manufacturing sector remains firmly in contraction territory," he said. "The sector is on course to act as a drag on gross domestic product in the third quarter."
The economy shrank 0.2% in the second quarter of the year and many economists say it will continue to weaken during the rest of the year, as European leaders battle a long-running debt crisis that has shattered confidence among investors, consumers and businesses.
"The euro-zone product and labor markets are unlikely to show any real sustained improvement until regional structural issues are addressed and the broader global backdrop brightens," Mr. Dobson said.
