The euro zone manufacturing sector contracted for a second month in May as output and exports shrank in two of the bloc's top three economies, France and Italy, but not in Germany, surveys showed today.
"This is a really depressing set of surveys, with manufacturing weakness now widespread across the euro zone," said Howard Archer at Global Insight in London.
The NTC Research Eurozone Purchasing Managers' Index fell to a 22-month low of 48.7 in May from 49.2 the previous month, staying below the 50 waterline between growth and contraction and coming in below a consensus forecast of 49.0.
"The indications are that what we are seeing is an increasingly entrenched downturn, as opposed to a temporary blip," said Chris Williamson, chief economist at NTC Research.
"(The PMI) strongly indicates that there is a need for interest rates to come down to help stimulate domestic demand in particular and to also encourage more companies to invest in capital expenditure."
The European Central Bank is expected to leave rates at 2 per cent tomorrow.