Growth in the euro zone services economy fell to a 23-month low in February, according to a Reuters index series, and services companies' optimism about the coming year moderated.
The Reuters Eurozone Business Activity index, based on a survey of over 1,500 service companies, fell 0.9 in February to 54.4, the lowest reading since March 1999. The February fall was the 10th consecutive monthly drop.
The latest reading was below the mean of 54.9 from nine forecasts made by economists in a Reuters survey.
"This services PMI does confirm the euro area economy is slowing but we're not seeing the kind of deterioration that we are seeing in the States", Mr Jean-Francois Mercier at Schroders Salomon Smith Barney in London.
Mr Mercier said he doubted the slowdown would persuade the European Central Bank to follow its US counterpart by cutting interest rates rapidly. Even though euro area growth will slow it's not the kind of dramatic slowdown that would require immediate action from the ECB, he said.
The euro zone economy is generally still growing well, in contrast to the United States which has suffered an abrupt end to its long economic boom. But European growth has slipped from a peak last spring.
Expectations in the euro zone services sector for the coming year remain solid with the Business Expectations index well over the 50 no change level. But the index, which rose in December and January, fell to 68.4 in February from 70.1 the previous month.
This signalled it may be returning to its downtrend since September 2000. From the second half of 1999 to August 2000, the expectations index consistently recorded numbers above 70.