The eurozone's manufacturing sector contracted for the sixth consecutive month in July and at the fastest pace since the end of 2012, according to final survey data from IHS Markit.
The final Purchasing Managers' Index for the sector declined to 46.5 in July from 47.6 in the prior month. The reading came in slightly higher than the preliminary estimate and the Econoday consensus estimate of 46.4.
The euro fell 0.3% against the dollar to $1.104 as of 5:30 a.m. ET. The yields on 10-year German and Italian government bonds rose 2 basis points to negative 0.42% and 1.57%, respectively.
The downturn was primarily led by a sharp decline in new orders, which in part were affected by global trade tensions, political uncertainties and the subdued auto industry. "The concern is that, while policymakers have become increasingly alarmed at the deteriorating conditions, there may be little that monetary policy can do to address these headwinds," said Chris Williamson, chief business economist at IHS Markit.
Output fell at the greatest extent since April 2013, while purchasing activity dropped at the fastest rate since the end of 2012. Meanwhile, employment dropped at the sharpest since May 2013 as backlogs of work declined for the 11th consecutive month, and confidence hit its lowest level since December 2012.
Germany led the downturn with a PMI reading of 43.2 in July, down from June's 45.0 but slightly higher than expectations of a 43.1 index reading. Meanwhile, the French PMI declined to a four-month low of 49.7 in July from a preliminary estimate of 50.0 and June's PMI reading of 51.9.