Eurozone manufacturing in contraction

Manufacturing activity in the Eurozone shrank in August for the first time in two years, a survey has indicated.

The Markit Manufacturing PMI measure for the Eurozone fell to 49.7 from 50.4 in July. A reading below 50 indicates contraction in the sector.

Manufacturing has driven a large part of the economic recovery in the 17-nation bloc.

Markit also said that the service sector in the Eurozone grew only modestly.

Its service sector PMI measure fell to a 23-month low of 51.5 in August from 51.6 in July.

In Germany, Europe's biggest economy, output grew across both manufacturing and services but showed the weakest rate of expansion for almost two years.

The French service sector saw growth pick up in August but manufacturing output fell for the first time since June 2009.

Outside the Eurozone's two largest economies, output fell for the third month in a row.

Chris Williamson, Markit's chief economist said: "The Eurozone economy grew only marginally again in August, suggesting that recent months have seen the weakest expansion for two years."