Emerging PMI data from countries across the euro zone has prompted many analysts to suggest that the recession is likely to plunge deeper than initially feared. The downward trending data is sure to heighten the pressure upon euro zone officials to come up with a plan for growth.

New manufacturing data from across the region was released this morning and the outlook was as gloomy as our recent May mornings. Output across the whole region fell to a 34-month low in April, dragging down euro zone PMI to a low of 45.9.

Both Italian and French factories have suffered their biggest drop in new orders for three years, with the Italian PMI now lingering around 43.8 for the month of April - a substantial drop on the previous month of 47.9. Any figure under 50 indicates contraction, but this new PMI data indicates an even faster contraction rate for the struggling Mediterranean nation.

The region’s biggest economy, Germany, has also suffered a body blow to growth with its manufacturing output shrinking at its fastest pace since July 2009; its PMI fell to 46.2, from 48.4 in March. Over in Spain there was more gloom - off the back of recent jobless data which indicated that one in four Spaniards are out of work - as PMI data fell to 43.5 from 44.5 the previous month. France displayed one of the only upturns in PMI data, notching up 46.9 in April compared to the previous month’s 46.7, a figure still way below economist expectations.

Chris Williamson of Markit - the organisation responsible for compiling the PMI reports - commented: “Austerity in deficit-fighting countries is having an increasing impact on demand across the region. Even German manufacturing output showed a renewed decline, attributed by many firms to weak demand from southern Europe.

“As such, it is hard to see where growth will come from in coming months, unless export demand picks up strongly from countries outside of the Eurozone.

“The ECB's latest forecast of merely a slight contraction.”

Economies outside the euro zone - who are feeling the sting from euro troubles - are now due to ratchet up the pressure on those responsible for formulating a growth plan for the region. One of the most vocal critiques of the stricken region has come from Jim Flaherty, Minister of Finance and the longest-serving finance minister in the G7, who has called for euro zone members to “fix their own mess”.

“We have always supported the IMF’s important systemic role in promoting economic stability by providing loans to countries that have exhausted their domestic options…But it is not the IMF’s role to substitute for national governments”, Flaherty asserted in an article for The Daily Telegraph in which he explained Canada’s decision to refuse to provide further financial assistance to the IMF for the purposes of euro zone recovery.

“Actions taken by the euro zone have fallen short of overwhelming the problem. The “muddle through” approach has led to an erosion of confidence in public leadership and too many missed opportunities.

“Canada believes in the euro zone’s ability to solve this crisis. We also believe in a strong and fair IMF where emerging economies can take their appropriate seat at the table. This is why we have decided not to provide additional resources to the IMF for the euro zone”, he added.

Hotly anticipated data concerning the US non-farm payrolls is due to emerge on Friday - when the strength of US recovery will be tested - and could result in further pressure being piled upon euro zone members to keep up with the pace of growth - only a handful of economies in the 17-member euro zone are now in growth.

Problems are not limited to manufacturing either, despite more than 1 trillion euros of cheap money having been pumped back into the banking system through cheap three-year loans and slashed interest rates, the PMI's euro zone employment index slumped to 47.6 in April, from 48.7 in March, its lowest reading since February 2010 as firms slashed their workforces to contain costs.

Sarah Cox, Staff Writer