The key measure of economic activity in the Eurozone dropped at its fastest rate since June 2009 this month as the single-currency region sank further into decline, marking a poor start to the fourth quarter.

Markit's Eurozone composite purchasing managers' index (PMI), which measures the combined output of the manufacturing and service sectors, fell for a third consecutive month to 45.8 in October, from 46.1 the month before. This was the worst reading in 40 months.

The consensus forecast was for an improvement to 46.5.

"Slightly weaker rates of decline in both business activity and new orders in the service sector contrasted with faster contractions in the goods-producing sector. Subsequently, manufacturing again saw the steeper downturn of the two sectors," the report said.

Firms in the Eurozone continued to cut employment in October, adjusting capacity down in response to lower levels of demand, Markit said. While the overall rate of job losses eased slightly, they remained close to the 32-month record seen the month before.

"The Eurozone has slid further into decline at the start of the fourth quarter. The survey is running at a level which is historically consistent with the region's economy contracting at a quarterly rate of over 0.5%," said Markit's Chief Economist Chris Williamson.

"Official data have shown surprising resilience over the summer compared to the survey data, but the underlying business climate has clearly deteriorated markedly in recent months. While gross domestic product may decline only modestly in the third quarter, a steeper fall looks to be on the cards for the fourth quarter."

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