20 September 2012 Last updated at 06:03 ET

Eurozone recession looms as business activity falls

Germany provided some good news, with the rate of decline in manufacturing slowing

Activity among eurozone firms suffered its steepest contraction since June 2009, according to a survey.

The Markit Flash Eurozone Purchasing Managers' (PMI) Composite Output Index fell to 45.9 in September, the lowest for 39 months, from 46.3 in August.

The composite figure combines services and manufacturing activity, and a figure below 50 indicates contraction.

Markit said the results indicated the eurozone was heading back into recession.

The services PMI activity index fell from 47.2 to 46, but the manufacturing PMI output index rose to 45.5 from 44.4 in August.

"The eurozone downturn gathered further momentum in September, suggesting that the region suffered the worst quarter for three years," said Chris Williamson, Markit's chief economist.

"The flash PMI is consistent with GDP contracting by 0.6% in the third quarter and sending the region back into a technical recession."

France struggles

However, while there were falls in production and new orders across the eurozone as a whole, Germany's rate of decline slowed "substantially".

"Services even saw a marginal upturn in activity for the first time since May," the report said.

But employment fell for the ninth consecutive month across the eurozone, with French payroll numbers being cut at the fastest rate since November 2009.

The French composite PMI figure fell to 44.1 in September, the lowest reading since April 2009, from 48.0 in August.

"France is really starting to struggle quite substantially," said Mr Williamson.

"Its economy is suffering as its neighbours are seeing demand weaken and... there are few signs of demand to stimulate growth in France."

Chinese manufacturing

Earlier, the flash PMI manufacturing measure for China had indicated another fall in output in the sector, adding further to eurozone woes.

The survey of factory managers found that while the rate of decline had slowed, manufacturing still fell in September for the 11th month in a row.

The HSBC flash China manufacturing PMI rose from 47.6 in August to 47.8 in September.

China has given the go-head for infrastructure projects worth more than $150bn (£93bn).