The eurozone economy underwent a slowdown in May as new business growth slid to its lowest level since January 2015.

The latest figures from Markit’s Purchasing Managers’ Index (PMI), which tracks manufacturing and services activity, show the bloc slipped to a 16-month low of 52.9 in May, down from 53.0 in April.

Markit said that with new business growth also sliding to the lowest since January 2015, the survey data points to a “strong likelihood” of output growth remaining “subdued or even weakening further” in June.

The rate of business activity expansion in the dominant service sector was unchanged for a third successive month, but the sector reported the smallest rise in new business since January 2015 despite many firms continuing to offer price reductions to boost sales. Expectations about future business activity also dipped to a ten-month low.

Manufacturing output growth was the second-weakest since February 2015. Growth of new orders received by factories also eased.

Producers reported that domestic market conditions remained tough, and softer international trade flows led to the smallest rise in new export business for 16 months.

On jobs, eurozone employment rose for the nineteenth month running. The rise was led by services, although factories also reported a modest increase in headcounts. The overall rise in employment was the largest since February.

Growth in Germany continued to strengthen across both manufacturing and services, with the overall pace of expansion reaching its highest since the end of last year.

France also continued its shift out of stagnation, with economic output rising at the fastest pace for seven months (but still below the euro area average), as faster services growth offset an ongoing manufacturing decline.

However, the accelerations in France and Germany were offset by a further cooling of the rate of expansion outside of the big-two nations to a 17-month low.

Markit chief economist Chris Williamson said the outlook for the eurozone was "lacklustre".

“A disappointing flash eurozone PMI for May adds further to the suggestion that the robust pace of economic growth seen in the first quarter will prove temporary,” he said. “The PMI is signalling lacklustre GDP growth of only 0.3 per cent in the second quarter.

“The forward-looking indicators also suggest growth is more likely to weaken further than accelerate. Inflows of new work showed the smallest rise for nearly a year and a half, while optimism about the business outlook in the service sector sank to its lowest since July 2015.”

He added that there were “signs of improving life” in the core countries of France and Germany, led mainly by their service sectors, as manufacturing continues to struggle.

“However, elsewhere the rate of expansion slowed to its weakest for almost one and a half years,” he said.

“The survey paints a picture of a region stuck in a low-growth phase, managing to eke out frustratingly modest output and employment gains despite various ECB stimulus bazookas, a competitive exchange rate and households benefitting from falling prices.”