The survey showed that euro zone business growth slowed sharply this month as demand fell for the first time since February, the bloc's services sector showed signs of weakness and the slump in manufacturing worsened.
This comes despite the European Central Bank cutting interest rates as widely reported earlier this month and a Reuters poll predicting two further rate cuts before the end of the year.
The preliminary HCOB composite purchasing managers' index compiled by S&P Global fell to 50.8 this month from 52.2 in May, reversing expectations of a rise to 52.5 in a Reuters poll.
However, in June it remained above the 50 mark that separates growth from contraction for four months.
“Is the manufacturing recovery over before it even begins? The services sector continues to support the euro area,” said Cyrus de la Rubia, chief economist at Hamburg Merchant Bank.
The overall new business index fell to 49.2, the lowest level in four months, from 51.6.
The PMI for the European Monetary Union's main services sector fell to 52.6 from 53.2 after a Reuters poll had forecast a rise to 53.5.
But inflationary pressures have eased, strengthening the case for the ECB to cut interest rates further this year. The services output price index fell to 53.7 from 54.2, the lowest in more than three years.
“The ECB may feel vindicated after cutting rates in June by price data suggesting easing pressures on the euro area services sector, but the HCOB PMI does not provide a basis for the ECB to cut rates further in July,” de la Rubia added.
Manufacturing activity has been declining for nearly two years, reversing recent signs of a recovery. The manufacturing PMI fell to 45.6, the lowest in six months, from 47.3. A Reuters poll had forecast a rise to 47.9.
The index measuring production plummeted to 46.0 from 49.3.
The downturn has forced factories to cut jobs for 13 straight months. The employment index fell to 47.5 from 47.9.
