By falling to 48.9, down from 49.9 in the previous month, the PMI index dropped further below the 50 mark that separates contraction from expansion and raised fears of a potential recession in the euro zone economy after two quarters of mild contraction.The UK economy is also slowing sharply, according to a separate PMI survey published on Monday that showed the index of British business activity fell to a seven-month low of 50.7, down from 52.8 in June.
Weakening demand triggered the steepest decline in manufacturing orders since 2009, while the services sector suffered its first drop in orders for seven months. Job growth continued, albeit at the slowest pace for more than two years. Unemployment in the euro zone fell to a record low of 6.5 per cent in May and hourly labour costs in the euro zone rose 5 per cent in the first quarter, down from a high of 5.6 per cent in the previous quarter.