HOPES of a quick economic recovery have been dented after the UK's manufacturing sector recorded its worst performance in more than three years, while output also dipped in Europe and Asia.
The Markit/CIPS purchasing managers' index, where a reading above 50 shows growth, was 45.4 for July in the UK, which was the lowest since May 2009.
It was also the third month of contraction after readings of 48.6 in June and 45.9 in May.
Wet weather, weak confidence and continuing problems in the eurozone were blamed as output, new orders and exports all fell.
New export business dropped at the fastest pace since February 2009.
There was a slight increase in employment, although this was to fulfil existing orders.
David Noble, chief executive at the Chartered Institute of Purchasing & Supply, said: "A perfect storm of wet weather and weak confidence in the UK has combined with global economic drift to engulf the manufacturing sector in July.
"While the eurozone has continued to be the major factor, declines in business from Asia have dashed hopes of a quicker recovery.
"Manufacturers are doing everything they can to arrest the decline, working through backlogs, cutting back on purchasing and passing on costs, but there is little room to manoeuvre.
"A slight increase in employment is the thinnest of silver linings for the sector, along with lower input prices and further growth in the consumer goods industry.
"However, the sharp decline in production of both investment goods and intermediate goods is an ominous sign."
Rob Dobson, senior economist at Markit, said: "Coming on the back of a 1.4% decline in manufacturing production in the second quarter, it looks like the sector remains a major drag on the overall economy.
"The announcement of additional quantitative easing and launch of the Funding for Lending scheme are too recent to have had an effect.
"We wait to see whether these will provide the desired and hoped for support to industry later in the year."
The UK figures came as PMI data in China revealed the slowest growth in manufacturing in eight months, while eurozone figures fell to a 37-month low.
Activity in the eurozone contracted for the eleventh straight month in July as a downturn that began in the periphery sank deeper roots into the core.
The manufacturing slump worsened in Italy, Spain and Greece, but also in the region's two biggest economies France and Germany, the purchasing managers indexes (PMIs) showed.
Osman Ismail, from the Centre for Economics and Business Research, said: "There remains little to be cheerful about.
"The manufacturing recessions in both the UK and the eurozone are set to drag on, placing continued downward pressure on economic growth during the second half of the year."
In China, the PMI slipped to an eight-month low of 50.1 in July from 50.2 in June, suggesting the sector is barely growing. Analysts had expected it to edge up to 50.3.
The data underscored how the world's second-biggest economy is losing momentum, and followed signs of slower Asian growth with major exporters such as Japan, South Korea and Taiwan all reporting worsening economic stress this week.
"The eurozone continues to struggle with the debt crisis, while the world economy is slowing down. This last piece of information should give policymakers food for thought," said Peter Vanden Houte at ING.
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